Why aren’t more oil firms going out of business?

Over the last 12 months the collapse in the price of oil has ensured that oil has been a permanent feature in financial news coverage.

However, just when you might have expected coverage to die down, continued price falls have ensured coverage has intensified. The prolonged nature of the price falls has also ensured the focus away from the consumer positives of lower petrol prices to the impact on the investment behaviour and sustainability of oil firms.  This is a particular issue for the UK economy due to the importance of the North Sea oil industry . 

This week EzyEconomics News uses demand and supply theory to analyse recent price falls and theory of the firm analysis to explain how firms involved in the supply of oil have been able to avoid going out of business.