Publications: Papers

Explaining the 2008 Crude Oil Price Rise (Working Paper, July 2008)

Petroleum is the most misunderstood commodity in the world. Policymaker ignorance regarding this “black gold” has had few consequences until recently. The Great Recession occurred in part because very few people in responsible positions comprehend the oil market. Furthermore, the advice of knowledgeable people who might counsel policymakers is dismissed out of hand. The price of crude oil in the summer of 2008 should have been $70 per barrel, not $140. The rise from $70 to $140 was not caused by a shortage. Instead it resulted from bad policies, bad luck, and incredible inattention to market details by certain officials.