Uncovering the Forces that Impact Oil Prices

The crude oil price spikes and high fuel costs experienced in the U.S. over the past ten years have encouraged many attempts to identify the underlying causes of these trends. Diminishing oil resources, slowing rates and increasing costs of production, financial speculation and geopolitics are all common arguments used to explain the recent volatile price changes in oil. But is there a correct answer? According to a recent MIT study, one theory can be ruled out: financial speculation. “We show speculation had little, if any, effect on prices and volatility,” and may have even decreased prices, wrote the authors of… [more]