If you apply the insights of the literature on disruptive innovation, last week’s fall in oil prices could well place members of the Organization of Petroleum Exporting Countries in a tough spot, and not just in the short term. Cost-cutting innovations in shale are weakening their grasp of energy market dynamics. Their prospects increasingly depend less on what they can do on the supply side and more on what they can hope for on the demand side. In the last few years, OPEC has operated in three distinct production regimes. Until November 2014, the emphasis was on supporting prices through comprehensive production ceilings, with a willingness to undertake the role of swing producer for the market as a whole. That changed when, led by Saudi Arabia, the cartel abandoned output limits on concerns that it risked losing long-term market share to non-OPEC and shale producers — thereby also lessening […]