Stories tagged with "crude oil spot price"
The Economics of Volatile Oil Prices
Posted by Phil Hart on February 18, 2009 - 10:12am in The Oil Drum: Australia/New Zealand
Topic: Economics/Finance
Tags: crude oil spot price, demand, supply [list all tags]
Considering the fundamental nature of oil supply and demand provides a coherent explanation not just for the rapid rise in oil prices, but also the dramatic fall.

In recent years, I despaired when I heard economists on TV explain oil's spectacular run up in prices by saying that 'demand was exceeding supply'. How could trained economists, in just a few short words, contradict the basic grounding in economics that I was taught early in my engineering degree?
Scarcity Rents and Oil Prices, Again
Posted by Dave Cohen on December 9, 2006 - 11:55am
Topic: Economics/Finance
Tags: backwardation, contango, crude oil spot price, discounting, james hamilton, scarcity rent [list all tags]
Figure 1 -- Click to enlarge
If Dave had gazed not at a century of prices but rather at just the last 15 years of the price of oil relative to the PCE deflator, would he have drawn the same conclusion? If all we had was the graph above, it would seem quite natural to conclude that a rising scarcity rent could well be one factor in the recent behavior of this commodity price...Not knowing of any good evidence to contrary, I'll just make the simplifying assumption that I'm right about the geology.... I am not at all prepared to dismiss the hypothesis that scarcity rents have indeed started to make a contribution to oil prices over the last five years, and will become more apparent over the next five...
Admittedly, if the oil price should fall from here down to $30, then I'll have to conclude that scarcity rents have had nothing to do with the recent price moves.
But if Dave is right about the geology, oil is not going to $30.
We'll return below to some of Hamilton's other observations as we consider what meaning to draw from the history of oil prices over the last several years.


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