The only reason oil is so cheap right now despite much higher consumption than in 2007 is that Saudi Arabia specifically decided to massively increase production, breaking OPEC. They did this because they see the writing on the wall. Better that they get all the remaining money to be made from oil and cut out entirely the people who extract oil less cheaply from shale and other sources.
Your thinking Saudi Arabia UNILATERALLY caused the oil glut. IF that were the case, Saudi Arabia would be more powerful than OPEC, etc. They are not. The thing is most of the world's oil producers were pumping oil at ever increasing quantities:
Yeah. Back when theoildrum.com was running, they'd post the reports on reserves for Saudi Arabia. SA are developing new fields, but compared to their rate of extraction, I didn't think it looked too pretty in the long term.
Peak profits from oil. They're desperately trying to sell as much as possible before renwewables eat their lunch. This is why the free market cannot solve global warming by itself - we'd need to leave lots of oil in the ground and countries like Saudi Arabia have a huge amount of latitude to drop prices in order to ensure this doesn't happen. It's not enough to just be cheaper than oil, you need to be cheaper than anyone can afford to drop the price they sell oil at to undercut you.
They're desperately trying to sell as much as possible before renwewables eat their lunch.
This is not the case. It may be in the next 10-20 years but the real reason is due to fracking. The fact is that the US / Canada has added additional supply to the market and no longer imports as much oil from OPEC.
US crude is sold at market prices and is NOT specifically dependent on Saudi Arabia supply increases (e.g. another oil producer could cut production and zero out that increase).
Also, the price fell long BEFORE Saudi Arabia increased production (about a year). This was due to excess supply and why Saudi Arabia tried to cut production in 2014.
You have it exactly backwards. Saudi Arabia removed production caps in 2014. Shale fields cannot produce oil profitably at the resulting prices and are shutting down. http://mobile.reuters.com/article/idUSKCN0JA0O320141128
