The problem is that no oil producer is making money at $40 per barrel. I've heard estimates that the break-even point is now $60 to $80 per barrel, so producers are hurting. Why doesn't a producer simply stop producing if it loses money on every barrel? That question is answered when you realize that most of our oil now comes from national entities (Saudi Arabia, Venezuela, Iran, etc.) rather than companies like Exxon or Shell. These countries do indeed work with companies, but the basic decisions there are governmental. These governments are dependent on oil revenue for infrastructure, social programs, military spending and all the rest. For them, if revenue stops, the government stops.