A oil glut is behind the falling price of a barrel of crude.
A oil glut is behind the falling price of a barrel of crude. - 
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A barrel of American crude is selling for less than $50 once again; a year ago the price was north of $90.

The bear market for oil production is a reaction to an unexpected glut, Marketplace's Scott Tong saysLast year, when OPEC signaled that it wouldn't cut the U.S. supply, oil producers all over the world kept pumping, he says. U.S. shale oil production keeps going, despite fracking. Saudi Arabia has record levels and Iraq oil is back "in a big way." Iranian could re-enter the market because of the potential lifting of sanctions.

Some analysts think the U.S. won’t see $100 barrels of oil for maybe five years, Tong says. The pessimists include drillers, who are cutting $200 billion in investments to stay afloat. Morgan Stanley likens this to the 1986 oil crash, which took the U.S. industry two decades to recover. Another camp says we’re in a new period of volatility. Before, OPEC was the price shock absorber, but it doesn't want that job any more. So perhaps we’ve entered the boom-bust-boom-bust chamber, he says.

All over the world, oil producers are struggling. In the oil sands area of Canada where it’s expensive to drill, unemployment has doubled and most new projects have been shelved. Venezuela is running out of petroleum revenue dollars to buy imports, which is especially problematic because most of its products are imported. Inflation there is 100 percent or more. Russia’s careening toward recession. In the Gulf of Mexico, drilling rigs have fallen by a thousand, and here in the United States, there have been tens of thousands of layoffs.

Oil producers are addicted to the revenue, but the picture is changing for consumers. According to the international energy agency, demand is slowing in rich countries – western Europe, Japan, the U.S. Even though emerging economies are buying more, demand will slow and eventually flatten out around 2040.

Click on the audio player above to hear more. 

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Follow Kai Ryssdal at @kairyssdal