ABSTRACT
The heady days of high world oil prices, which commenced in the 1970s, finished abruptly in 1986. Except for the brief respite when oil prices spiked during the build up to the 1991 Persian Gulf War, prices will most likely remain at these lower levels. As a result, the United States, which is a high-cost producer by world standards, has seen its oil industry strongly depressed. From 1985 to 1990, the numbers of U.S. seismic crews fell by 67 percent, active rotary rigs by 49 percent, and wells drilled by 59 percent. Both the number of rotary rigs and wells drilled rebounded slightly with the higher prices in 1990, but U.S. oil production continued to fall with a total decrease of 18 percent from 1985 to 1990. At the same time, low prices stimulated oil product consumption. Although the slower U.S. economy caused a slight decrease in oil product consumption in 1990, the overall increase from 1985 to 1990 was still 10 percent. With falling production and rising consumption, nervous politicians watched imports share of consumption rise from 31 percent in 1985 to almost 47 percent in 1990, a share not seen since the peak in 1977. †
