Recommended Paper – Introduction to the Oil Markets and Oil Prices

I’ve started a new section recommending some of the best papers I’ve read on commodities and energy.

The first entry goes to this paper by Fabian Kesicki of the Energy Institute, UCL, University of London, entitled ‘The third oil price surge – What’s different this time?

In a well written 11 pages Fabian covers all the basics of the modern oil market as well as the history of oil in the 1970’s, when the previous two ‘oil shocks’ happened.  He covers in detail demand factors that affect the price of oil (GDP and energy intensity, substitutability of other energy sources) as well as production issues (capacity constraints, investment, various major discoveries, reserves ‘growth’ etc).  He also looks at refining issues, discusses the different types of crude oil as well as the major uses of oil, and what this means for refineries.  He manages to cover geopolitics, looking at OPEC (as you’d expect) and the effect of OPEC’s varying pricing power over time.  He even covers the role (large or otherwise) of speculators in high oil prices, and finishes by examining the effect of the US dollar exchange rate on oil prices.

In conclusion, if you want to read one paper and learn a vast amount about the oil industry and oil prices since the 1970’s, read Fabian Kesicki’s paper.  His paper covers an amazingly wide range of issues, without dwelling excessively anywhere.  I have not read a better summary of the world oil markets.


Kesicki, Fabian. 2010. The third oil price surge – What’s different this time? Energy Policy 38, no. 3 (March): 1596-1606. doi:10.1016/j.enpol.2009.11.044.

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