A well-respected oil executive recently informed a group of Houston business people that the solution to the low cost of oil is the low cost of oil (and presumably patience). He explained that if the market price reduces the amount of new inventory, then the price ultimately rises in connection with the depletion of inventory or growth in the world economy. In other words, the fundamental economic principle of supply and demand will sort out the imbalance created by the low cost of oil.
For lawyers, however, the issue is not so much the cost of oil, but rather, it is the variety of litigation impacted by the cost of oil. Historically, litigation has experienced ebbs and flows in connection with the price of oil. Largely this has been dependent upon the impact oil price has on cash flow, and the leverage it can have on a company’s profit and loss statement.
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