An overload of debt in the oil patch has temporarily distorted the economic law of supply and demand, and price discovery. Being held to fixed debt payments as the price of the underlying asset falls, there is only one thing that an oil company can do considering they can only raise revenue one way, and that's pump and sell more oil. Where as an oil company with no, or a reasonable debt load, could quietly and somewhat painlessly take production off line until prices realigned with cost, an over-indebted company has no choice but to increase production in an attempt to survive. If only a small portion of companies had their hand forced by debt, there wouldn't be much of a problem, but when it is the entire industry the supply demand fundamentals are temporally shredded.
I say temporally because under this dynamic the oil companies will eventually fail, and the assets/oil wells will land in less leveraged hands who can hold off production. Supply and demand will realign at a level commensurate with total cost production, but currently the proper forces of the free market are being delayed. Of course this process of defaults and deleveraging in an industry as large as energy will have larger implications that could cause a critical mass default, but that is for future post.
Now on to socialism, which surprisingly causes a similar dynamic as explained above. If we don't just think of debt as money borrowed, but any deduction from revenue unrelated to current operating costs to produce oil we can also include government taxes on a country's oil industry. If a country has the ability to control the oil industries production, and they have built their social system around oil revenue, they are in the same situation as the debt laden shale drillers. The difference being, if an over indebted shale driller s goes bankrupt the executives lose their jobs and stock options, if an oil exporter can't maintain its social welfare programs that their people have become accustomed to, they risk major civil unrest and revolt. Venezuela, Saudi Arabia and many other OPEC nations are in this situation and in many cases have attempted to increase production to make up for the shortfall left by receding prices. Even Russia has some of these dynamics at play, as this quote illustrates.
"Russia will maintain its current oil production levels within the bandwidth of 525 million to 533 million tons next year, as the federal government's budget is set on such production levels," Lauren Goodrich
While this situation is causing a larger glut of oil now, it is also causing a lack of investment in future production, which could cause a just as impressive snap-back when restructuring occurs for both companies and nations, but only time will tell.
The reality is, debt based monetary systems cause excessive amounts of debt, and excessive debt prevent market participants from rationally reacting to supply demand fundamentals and hinders the price discovery mechanisms of the free market. Socialism appears to do the same for oil exporting nations.