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World Oil: Market or Mayhem?

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  • James L. Smith

Abstract

Many observers regard the world oil market as a puzzle. Why are oil prices so volatile? Why did prices spike in the summer of 2008, and what role did speculators play? How important is OPEC? Where are oil prices headed in the long run? Is "peak oil" a genuine concern? Any attempt to answer these questions must be informed and disciplined by economics. We examine the evidence on each of these issues and provide an interpretation of developments in the world oil market from the perspective of economic theory.

Suggested Citation

  • James L. Smith, 2009. "World Oil: Market or Mayhem?," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 145-164, Summer.
  • Handle: RePEc:aea:jecper:v:23:y:2009:i:3:p:145-64
    Note: DOI: 10.1257/jep.23.3.145
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.23.3.145
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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