MY EDUCATION IN MINERAL (ESPECIALLY OIL) ECONOMICS

The crude oil and natural gas markets have a long colorful history. To understand them, one needs some economic theory. The dominant view, o f a fixed mineral stock, implies that a unit produced today means one less in the future. As mankind approaches the limit, it must exert eve r more effort per unit recovered. This concept is false, whether state d as common sense or as elegant theory. Under competition, the price r esults from endless struggle between depletion and increasing knowledg e. But sellers may try to control the market in order to offer less an d charge more. The political results may feed back upon market behavio r. These factors-depletion, knowledge, monopoly, and politics-must be analyzed separately before being put together to capture a slice of a changing history.