After peaking at over $110 USD per barrel in June of this year, Brent crude prices slowly began to creep downward, reaching $100 by September. As the year went on, the slow downward creep gradually accelerated – by November 1, the price had fallen below $85, and by the time of this writing in mid-December, it was poised to sink to a five-year low of $60/bl.

Obviously, such a major price change in what is arguably the global economy’s most important commodity is going to produce winners and losers. In this piece we’ll take a quick look at why prices just keep falling, who is benefiting from the low prices, and how they will reshape the global energy economy for the near future.

It’s pretty clear that the current low prices are related to a glut of petroleum production. Between 2005 and 2014, shale oil production in the United States increased from 290,000 barrels/day to over 4.5 million barrels per day.

As prices began to fall, many analysts predicted that OPEC would cut back its own production in order to keep prices high. Saudi Arabia, the most prolific OPEC producer, has increased government spending in recent years and it was assumed that there would be political reasons to keep prices high.

Instead, however, OPEC has decided not to modify production quotas. Some people interpret this as an attempt to force US producers to scale back, a move that might help Saudi Arabia maintain more control over production. Such a strategy makes sense considering the fact that unconventional North American oil tends to be more expensive to produce than Saudi oil.

American producers are indeed being forced to scale back production. The high turnover rate of unconventional wells means that the level of investment in new wells is closely linked to short-term price fluctuations. As a result, the rate of growth in shale oil investment is already showing signs of slowing. The dramatic lowering of prices will also make many new shale oil developments in Alberta uneconomical in the near future.

Although the American oil industry is set to lose out as prices fall, some economists think that falling prices will spur economic growth, especially in the stagnant European economies. And if history shows us one thing, it’s that economic growth means increased demand for energy. Although the current boom might be over, it’s only a matter of time before high prices and rapid growth come around again.

For more analysis of the effects of OPEC’s decision, check out these articles:

OPEC Takes Aim at US Shale

OPEC Claims low prices are result of speculation, not market conditions