Lower For Shorter? Looking Back At The 1997-1999 Oil Price Downturn

With oil prices currently hitting new post-2009 lows we wanted to provide some perspective.

The prevailing consensus view we see today is overwhelmingly negative with the vast majority predicting oil prices will be “lower for longer” with little hope for a recovery anytime soon. We think this type of thinking is too narrow. If there is one thing for certain, it is that the future is uncertain. The fatal flaw of many prognosticators is they only allow for one possible future and inevitably turn out to be wrong. It is human nature to seek out or form a singular vision of what will happen in the future because the alternative is to say “I don’t know” and uncertainty is frightening. In reality there is always a wide range of possible scenarios that could unfold. To make matters even more challenging, many possible outcomes are not fathomable by most people today (for example, even the most bearish forecaster in 2014 didn’t think oil prices could drop below $40). This is important to keep in mind when commentators argue the merits of their version of the future

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