In each time, it's been because a glut of oil has flooded the market.

It's pretty simple: more supply than demand makes oil cheap.

Now, the reason for the oversupply has been different each time,

but the outcome has always been the same.

It takes months, sometimes years, for the oil market to correct itself.

Back in the mid-80s, oil production surged in Alaska and other parts of the US.

Saudi Arabia confronted the threat by opening its taps,

and prices plunged more than 60%, to ten dollars a barrel—

about twenty dollars today.

US producers suffered, Saudi Arabia regained the control of the market,

and it wasn't until four years later, in 1990,

that prices went back to pre-1986 levels.

A decade later, OPEC increased production

because of increased demand coming from Asia,

but the timing couldn't have been worse.

A financial crisis erupted across the region,

demand plummeted, and once again prices collapsed almost as low as ten dollars a barrel.

OPEC quickly reversed its decision and slashed production,

and the next year, prices more than doubled.

The oil market suffered the steepest crash in history in 2008,

because of the global recession.

When the economic tanked, so did the demand for oil,

the prices fell 78%, to about thirty dollars a barrel.

OPEC stepped in and agreed to its biggest ever production cuts,

which helped the price recover through 2009.

That brings us to the most recent oil glut.

American oil output has almost doubled in the past five years

because of shale production.

But OPEC has refused to cut back.

There's roughly enough oil in storage

to power the entire developed world for two months.

Prices dropped more than 70% to less than thirty dollars a barrel.

And with both OPEC and the major US producers not significantly cutting back,

recovering from this slump might take even longer than in the past.