Publications: Notes at the Margin

Swing Demand and the Petroleum Market's New Economics (October 17, 2016)


Most who follow petroleum—oil ministers, analysts, economists, company officials, and government policymakers, for example—use a very old model to explain and predict price movements. They believe inventories held by consumers are the enemy and that excess stocks must be drawn down and used. Only when holdings get back to some "normal" level will oil producers gain any control over the market. A significant problem exists with these statements: they reflect the oil market that existed in the 1970s and 1980s. Today, things are very different.


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