More thoughts on oil economics…

Heading Out writes: I would like to continue the dialogue that Econbrowser started, and which continues both there and in comments there and here. I am helped a little in this by an article in todays St Louis Post Dispatch, to which I will refer in a bit.

Rather however, this time, responding to specific comments Econbrowser has made, I would like to review the history of oil production to emphasize three points, which may clarify the issue. If I appear to oversimplify, please feel free to help us out in this debate, but I want to talk about the reasons for the Texas Railroad Commission and OPEC; that oil companies drill with your money not theirs; and that, once a well starts producing, owners will keep it going even if they lose money. (and along the way try and answer JimBobRay on the open thread).

When oil first came on the market there was not enough to go around, and prices were attractive enough to encourage many people to sink oilwells and get on the bandwagon…

More after the jump at The Oil Drum.