An Institutionalist Perspective on the Economy and Price of Oil

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Abstract

The price of oil historically has not reflected the emergence of absolute scarcity. Rather, in examining the secular price of oil since World War II (WWII), it is apparent that the institutions that control the price of oil disguise this reality. By “secular price of oil” we mean a trend line reflecting the business interest of the oil industry. The price trend of oil has served the business interest in the post WWII era, and it is not a timely indicator of absolute scarcity. To be sure, the history of the price of oil has been one of oscillation around this trend line. These oscillations have many explanations, such as geopolitical events, speculation, the value of the dollar, and technological improvements.

Keywords

Institutional Economic Business Interest Institutional Reality Demand Supply Corporate Average Fuel Economy 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
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Notes

Acknowledgments

I acknowledge the contribution of Gerald Surette, who was a sounding board for many of the ideas presented in this chapter and who helped with development of an earlier draft. Sadly, Gerald died unexpectedly before its completion. Since then, the chapter has been substantially reworked and much new information has been incorporated into this draft.

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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.Economics DepartmentState University of New York at CortlandCortlandUSA

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