{"product_id":"understanding-oil-prices-isbn-9781119962724","title":"Understanding Oil Prices","description":"\u003cp\u003eIt’s a fair bet that most of what you think you know about oil prices is wrong. Despite the massive price fluctuations of the past decade, the received wisdom on the subject has remained fundamentally unchanged since the 1970s. When asked, most people – including politicians, financial analysts and pundits – will respond with a tired litany of reasons ranging from increased Chinese and Indian competition for diminishing resources and tensions in the Middle East, to manipulation by OPEC and exorbitant petrol taxes in the EU. Yet the facts belie these explanations. For instance, what really happened in late 2008 when, in just a few weeks, oil prices plummeted from $144 dollars to $37 dollars a barrel? Did Chinese and Indian demand suddenly dry up? Did Middle East conflicts magically resolve themselves? Did OPEC flood the market with crude? In each case the answer is a definitive no – quite the opposite in fact.\u003c\/p\u003e \u003cp\u003eIndustry expert Salvatore Carollo explains that the truth behind today’s increasingly volatile oil market is that over the past two decades oil prices have come untethered from all classical notions of supply and demand and have transcended any country’s, consortium’s, cartel’s, or corporate entity’s powers to control them. At play is a subtler, more complex game than most analysts realise (or are unwilling to admit to), a very dangerous game involving runaway financial speculation, self-defeating government policymaking and a concerted disinvestment in refinery capacity among the oil majors. \u003c\/p\u003e\u003cp\u003eIn \u003ci\u003eUnderstanding Oil Prices\u003c\/i\u003e Carollo identifies the key players in this dangerous game, exploring their competing interests and motivations, their moves and countermoves. Beginning with the 1976 oil embargo and moving through the 1986 Chernobyl incident, the implementation of the US Clean Air Act Amendments of 1990, and the precipitous expansion of the oil futures market since the turn of the century, he traces the vast structural changes which have occurred within the oil industry over the past four decades, identifying their economic, social and geopolitical drivers, and analysing their fallout in the global economy. He explores the oil industry’s decision to scale down refining capacity in the face of increasing demand and the effects of global shortages of petrol, diesel, jet fuel, fuel oil, chemical feedstocks, lubricants and other essential finished products, and describes how, beginning in the year 2000, the oil futures market detached itself almost completely from the crude market, leading to the assetization of oil, and the crippling impact reckless speculation in oil futures has had on the global economy. Finally he proposes new, more sophisticated models that economists and financial analysts can use to make sense of today’s oil market, while offering industry leaders and government policymakers prescriptions for stabilising the market to ensure a relatively steady flow of affordable oil.  \u003c\/p\u003e\u003cp\u003eA concise, authoritative guide to understanding the complex, oft misunderstood oil markets, \u003ci\u003eUnderstanding Oil Prices\u003c\/i\u003e is an important resource for energy market participants, commodity traders and investors, as well as business journalists and government policymakers alike.  \u003cb\u003eForeword xiii\u003c\/b\u003e  \u003c\/p\u003e\u003cp\u003e\u003cb\u003ePreface xv\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eQuick Reference Guide xix\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eList of Figures xxiii\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eList of Tables xxvii\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eList of Boxes xxix\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e1 TheWorld Crude Oil Paradoxes 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e2 The Market Events from 2008 to 2011 7\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWorld Energy Policy 8\u003c\/p\u003e \u003cp\u003eThe Financial Crisis and the Oil Market 10\u003c\/p\u003e \u003cp\u003eFundamentals or Financial Speculation? 17\u003c\/p\u003e \u003cp\u003eDemand\/Supply of Gasoline and Gasoil 21\u003c\/p\u003e \u003cp\u003eWTI – Brent Differential 24\u003c\/p\u003e \u003cp\u003e\u003cb\u003e3 Evolution of the Price of Crude Oil from the 1960s up to 1999 29\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e1960–1980: The Oil Monopoly and the Two Crises in the 1970s 30\u003c\/p\u003e \u003cp\u003eThe 1980s: The Gradual Disappearance of OPEC 33\u003c\/p\u003e \u003cp\u003eThe Price War 35\u003c\/p\u003e \u003cp\u003e1985–2000: From the Introduction of Brent as an International Benchmark to the Clean Air Act 37\u003c\/p\u003e \u003cp\u003eThe Suicide of OPEC 40\u003c\/p\u003e \u003cp\u003eThe Start of the Free Market 41\u003c\/p\u003e \u003cp\u003eThe Consequences of the Environmental Turnaround 44\u003c\/p\u003e \u003cp\u003e\u003cb\u003e4 Changes in the Market for Automotive Fuels 45\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eEvolution of Environmental Demand 45\u003c\/p\u003e \u003cp\u003eGasoline and its Components 50\u003c\/p\u003e \u003cp\u003eReforming 51\u003c\/p\u003e \u003cp\u003eCracking 52\u003c\/p\u003e \u003cp\u003eAlkylation 53\u003c\/p\u003e \u003cp\u003eIsomerization 53\u003c\/p\u003e \u003cp\u003eRefiners Walk the Tightrope 53\u003c\/p\u003e \u003cp\u003eThe Fiscal Policy of the Industrialized Countries Regarding Fuels 55\u003c\/p\u003e \u003cp\u003e\u003cb\u003e5 World Oil Flow 63\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eTransformations in the Downstream 66\u003c\/p\u003e \u003cp\u003eWorld Supply Structure 70\u003c\/p\u003e \u003cp\u003e\u003cb\u003e6 The Classical Model of the International Oil Market 73\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e7 The Short-term Model of the International Oil Market 81\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e8 The Brent Market 89\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eThe Sale and Purchase Contract 90\u003c\/p\u003e \u003cp\u003eThe Forward Market for Brent (15 day Brent Contract) 94\u003c\/p\u003e \u003cp\u003eThe IPE Brent Market 100\u003c\/p\u003e \u003cp\u003eThe Divorce Between Oil Price and Oil 102\u003c\/p\u003e \u003cp\u003e\u003cb\u003e9 Principal Uses of the Forward and Futures Markets 105\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eTax Spinning 105\u003c\/p\u003e \u003cp\u003eBenchmarking 105\u003c\/p\u003e \u003cp\u003eHedging the Price Risks 106\u003c\/p\u003e \u003cp\u003eSpeculations on Operational Flexibilities at Loading 114\u003c\/p\u003e \u003cp\u003eMarket Structure: Contango and Backwardation 117\u003c\/p\u003e \u003cp\u003eProcedures at the Loading Terminals 119\u003c\/p\u003e \u003cp\u003e\u003cb\u003e10 Problems of the Brent Forward Market 123\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e11 The European Refinery Crisis 131\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e12 Conclusions:We are Ourselves OPEC 155\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eBibliography 163\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eIndex 165\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003ci\u003e\u003cb\u003eAbout the author\u003c\/b\u003e\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eSALVATORE CAROLLO\u003c\/b\u003e graduated in engineering from the University of Palermo, where he also served as a lecturer and researcher. In 1975 he began working at eni; both in Italy and abroad where he was active in various sectors of the petroleum downstream, refining, market research, supply and trading of crude oil. Since 1995 he has been based first in Amsterdam and then in London as the manager of the Upstream Marketing Department, where he is responsible for the commercial relations with several producing countries and eni partners in various joint ventures. Within this area he provides support to eni corporate university, through teaching activities at the Mater MEDEA and organizing the annual Oil Market and Commercialization of Crude Oil seminar. He is often called in as an expert by various institutions in the oil sector to provide his own analysis on the dynamics of oil prices.  \u003c\/p\u003e\u003cp\u003eIt’s a fair bet that most of what you think you know about oil prices is wrong. Despite the massive price fluctuations of the past decade, the received wisdom on the subject has remained fundamentally unchanged since the 1970s. When asked, most people – including politicians, financial analysts and pundits – will respond with a tired litany of reasons ranging from increased Chinese and Indian competition for diminishing resources and tensions in the Middle East, to manipulation by OPEC and exorbitant petrol taxes in the EU. Yet the facts belie these explanations. For instance, what really happened in late 2008 when, in just a few weeks, oil prices plummeted from $144 dollars to $37 dollars a barrel? Did Chinese and Indian demand suddenly dry up? Did Middle East conflicts magically resolve themselves? Did OPEC flood the market with crude? In each case the answer is a definitive no – quite the opposite in fact.\u003c\/p\u003e \u003cp\u003eIndustry expert Salvatore Carollo explains that the truth behind today’s increasingly volatile oil market is that over the past two decades oil prices have come untethered from all classical notions of supply and demand and have transcended any country’s, consortium’s, cartel’s, or corporate entity’s powers to control them. At play is a subtler, more complex game than most analysts realise (or are unwilling to admit to), a very dangerous game involving runaway financial speculation, self-defeating government policymaking and a concerted disinvestment in refinery capacity among the oil majors. \u003c\/p\u003e\u003cp\u003eIn \u003ci\u003eUnderstanding Oil Prices\u003c\/i\u003e Carollo identifies the key players in this dangerous game, exploring their competing interests and motivations, their moves and countermoves. Beginning with the 1976 oil embargo and moving through the 1986 Chernobyl incident, the implementation of the US Clean Air Act Amendments of 1990, and the precipitous expansion of the oil futures market since the turn of the century, he traces the vast structural changes which have occurred within the oil industry over the past four decades, identifying their economic, social and geopolitical drivers, and analysing their fallout in the global economy. He explores the oil industry’s decision to scale down refining capacity in the face of increasing demand and the effects of global shortages of petrol, diesel, jet fuel, fuel oil, chemical feedstocks, lubricants and other essential finished products, and describes how, beginning in the year 2000, the oil futures market detached itself almost completely from the crude market, leading to the assetization of oil, and the crippling impact reckless speculation in oil futures has had on the global economy. Finally he proposes new, more sophisticated models that economists and financial analysts can use to make sense of today’s oil market, while offering industry leaders and government policymakers prescriptions for stabilising the market to ensure a relatively steady flow of affordable oil.  \u003c\/p\u003e\u003cp\u003eA concise, authoritative guide to understanding the complex, oft misunderstood oil markets, \u003ci\u003eUnderstanding Oil Prices\u003c\/i\u003e is an important resource for energy market participants, commodity traders and investors, as well as business journalists and government policymakers alike.\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47990431940837,"sku":"NP9781119962724","price":73.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9781119962724.jpg?v=1761787802","url":"https:\/\/k12savings.com\/es\/products\/understanding-oil-prices-isbn-9781119962724","provider":"K12savings","version":"1.0","type":"link"}