Publications: The Petroleum Economics Monthly

Really Understanding Oil Markets -- The 2013 Version (January 2013)


The standard fiction regarding oil markets put forward by forecasters at the International Energy Agency and the Energy Information Administration and by academics ties oil price movements to changes in aggregate consumption. The growth of oil use in China is important to these individuals. The surplus capacity of oil-exporting countries is also important to their macro analyses. These studies can be frustrating to those familiar with the market’s details, though, because the IEA, EIA, and academic writers seem unwilling to dig beyond data they can easily download. In “Really Understanding Oil Markets – The 2013 Version,” we examine all the factors that contribute to oil prices. In doing so, we argue that the academic studies are more fiction that fact. We suggest that the world’s consumers in 2013 may pay as much as $1 trillion more for petroleum than they would have had academics paid closer attention to market structure.


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