The price of oil has been slammed over the past year as surging supplies have been met with tepid demand. Meanwhile, OPEC has decided to sit on its hands and protect its share of the oil market instead of cutting production as it usually does. Welcome to the wild and wacky oil industry.
Until last summer the price of oil had been relatively high and relatively stable. That was due to the fact that demand for oil was strong and supplies were just enough to meet growing demand. Once that dynamic changed it quickly caused the price of oil to plummet sending energy investors on a nauseating downward spiral.
Too many investors were caught off guard because they really don't know three critical things about the industry. I've detailed the three things every investor should know about the energy industry in the following slideshow. By better understanding how the industry works and its pitfalls it should make you a better investor in energy related stocks.