Analysis of the Effective Factors on Oil Price Movements

The crude oil price has shown some drastic changes since 1950. In a competitive or monopoly market one would expect that the real price to rise steadily as the marginal cost rises, not to jump sharply. Is it possible to explain these large movements in the oil prices on the basis of economic theory of resource depletion? If we can understand the real reasons of the past oil price movements, we can hope to be able to foresee what may happen in the future. In this paper, the Hotelling-type model (Robinson, 1975 & Ulph, 1984) has been applied to analyse the factors effecting oil price movements.