Working Paper: NBER ID: w14492
Authors: James D. Hamilton
Abstract: This paper examines the factors responsible for changes in crude oil prices. The paper reviews the statistical behavior of oil prices, relates these to the predictions of theory, and looks in detail at key features of petroleum demand and supply. Topics discussed include the role of commodity speculation, OPEC, and resource depletion. The paper concludes that although scarcity rent made a negligible contribution to the price of oil in 1997, it could now begin to play a role.
Keywords: No keywords provided
JEL Codes: Q3; Q4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| theory of exhaustible resources (Q31) | price of oil should exceed its marginal cost (Q31) |
| scarcity rent becoming relevant due to increased demand from newly industrialized countries (F61) | changes in oil prices (Q31) |
| speculation and dynamics of OPEC's production decisions (Q38) | influencing oil prices (Q31) |
| low price elasticity of short-run demand and supply, alongside the vulnerability of supplies to disruptions (Q31) | broad behavior of oil prices from 1970 to 1997 (Q31) |