The Price of Oil

Gregory Brew in Phenomenal World:

In October 2021, the price of gasoline in the United States rose to its highest level in seven years. There were many reasons for this: surging demand following a year-and-a-half of lockdown, a slower than expected recovery of oil production, and imbalances in products inventories due to energy shortages in Europe and East Asia. Experts believed prices would fall in the new year. Instead, Russia’s invasion of Ukraine in February 2022 sent them to new and historic heights, rattling markets and increasing the US price of gasoline to more than $4 a gallon.

It is easy to see that the price of oil is one of Joe Biden’s biggest problems, but harder to figure out whether Biden can do much about it. If he can’t, who can? An entire industry exists to predict future changes in the price of oil. Oil companies themselves try to imagine where the price will be, so that they can schedule capital expenditures to meet future demand, often without much success.

Today, the volatility of oil prices is taken for granted. But this was not always the case.

More here.