Supply and demand.
Everything comes down to supply and demand.
I’m not certain of all the events that took place to get us to where we currently are, but suddenly the world has way more oil than it is using. I saw an aerial photo recently of oil being stored in tankers—lots of tankers—off the coast of Galveston, TX. The situation has gotten to the point that Goldman thinks oil at $20 per barrel is a likely scenario. This is definitely not good news for companies that rely on a higher oil price in order for their economics to work.
That said, with all things economics, there will be winners and losers. Lower oil prices will translate into cheaper gas prices at the pump. It will also mean cheaper fuel for transportation and shipping services. The downside is that many people in the oil industry will be out of jobs, something this economy cannot handle.