Oil prices may remain in this range for three to four years

Oil prices below $50 a barrel aren't having the same impact on production they once had.

Conventional wisdom says that when oil prices drop to $40 a barrel or less, drilling stops and the oil exploration companies pull back from drilling new wells and bringing on more production until prices rise.

The problem with that thinking is the cost of producing oil from shale with new technology is so low that most companies are continuing to pump that oil even when prices dip toward $30 a barrel, says Informa Economics’ Kip Butts.

Butts, senior cotton analyst and director of energy services for Informa Economics, explained some of the new dynamics of the oil market in a presentation at the Southern Cotton Ginners Association’s summer meeting in Lafayette, La.

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