Understanding Crude Oil Prices

46 Pages Posted: 17 Nov 2008 Last revised: 6 Feb 2021

See all articles by James D. Hamilton

James D. Hamilton

University of California at San Diego; National Bureau of Economic Research (NBER)

Date Written: November 2008


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.

Suggested Citation

Hamilton, James D., Understanding Crude Oil Prices (November 2008). NBER Working Paper No. w14492, Available at SSRN: https://ssrn.com/abstract=1301939

James D. Hamilton (Contact Author)

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