Comment Re:Market backlash (Score 3, Insightful) 176
I'm not an economist, but...
Oil producers have a $/barrel below which it's uneconomical to get oil out of the ground. E.g. the Saudis can pump oil out at $2.80/barrel according to a Yahoo article I just googled up. (It's not quite that simple: production cost is one thing, but countries that fund themselves by oil production have other expenditures that need to be covered by the sale of their oil, so the market $/barrel they need to cover their budget requirements is much higher... but you get the idea.)
As demand falls, that puts downward pressure on price, but as prices fall those producers with a higher $/barrel will exit the market, so supply will fall too, which puts an upward pressure on price. There's also Jevons Paradox, whereby efficiencies which mean less oil is needed will actually mean more rather than less oil is used.
So I don't think oil will ever be dirt cheap, there will be some equilibrium price which is lower than it is today but not crazy low.