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WJWtoday at 11:59 AM2 repliesview on HN

Interestingly, oil investors experience this boom-and-bust cycle too: every time oil prices spike, a bunch of extra companies flood into the market to drill some wells or weld pipelines or build tankers or whatever. All the extra supply crashes the price and most of the new companies go bankrupt or get consolidated into the big energy firms. This slowly brings spare capacity back down, so the next time there's a disruption the cycle kicks off for its next round.


Replies

smallerizetoday at 12:47 PM

That used to be true, but things have really settled down. Notice the lack of rushing to start more fracking or refining projects during this crisis.

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bigthymertoday at 1:01 PM

Typical commodity cycle...most commodities work like this