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Lack Of Economics In Oil

INTRODUCTION
There can hardly be a living sole in the industrialized world that is not aware of the rise and fall of gasoline prices. Especially, when the gasoline price increase is sudden and significant. The price of gasoline and other petroleum products is so pervasive in our lives and lifestyles that from the adolescent to the retiree, there is no greater price awareness for any commodity, product, or service than for gasoline. Yet in the past 28 years, of all the commodities, products, or services, none have experienced as much fluctuations, up and down, than gasoline. There is no other price for a commodity, product, or service that can affect or has affected everyone in the industrialized world as much as the price of gasoline.
The price of gasoline can cause recessions; it can cause economic prosperity; it can destroy companies and complete industries; or it can provide companies and complete industries with windfall profits. On the individual level, the price of gasoline affects how a person will work, how he/she will get to work, or if there is any work.
This paper will very briefly summarize the fluctuations in the price of gasoline the world has seen since 1973, and some of the major events that affected petroleum producers and consumers during this period. And this paper will attempt to show that these price fluctuations did not always follow the textbook models of supply and demand, and will offer some of the reasons why the causes of the deviation are numerous and complex and how political policies also help cause such deviations. And finally this paper will try to put the prices of oil and gasoline in perspective with other indices.
HISTORICAL BACKGROUND
From the beginning in 1849, when Edwin Drake drilled the first oil well in Titusville, Pennsylvania, the story of oil has been a fascinating saga of epic proportions. Next to religion, it has been fought over in more wars, it has caused governments and their leaders to rise to power or...