Crude Volatility

The History and the Future of Boom-Bust Oil Prices

Robert McNally

Columbia University Press

Crude Volatility

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Pub Date: January 2017

ISBN: 9780231178143

336 Pages

Format: Hardcover

List Price: $35.00£27.95

Pub Date: January 2017

ISBN: 9780231543682

336 Pages

Format: E-book

List Price: $34.99£27.95

Crude Volatility

The History and the Future of Boom-Bust Oil Prices

Robert McNally

Columbia University Press

As OPEC has loosened its grip over the past ten years, the oil market has been rocked by wild price swings, the likes of which haven't been seen for eight decades. Crafting an engrossing journey from the gushing Pennsylvania oil fields of the 1860s to today's fraught and fractious Middle East, Crude Volatility explains how past periods of stability and volatility in oil prices help us understand the new boom-bust era. Oil's notorious volatility has always been considered a scourge afflicting not only the oil industry but also the broader economy and geopolitical landscape; Robert McNally makes sense of how oil became so central to our world and why it is subject to such extreme price fluctuations.

Tracing a history marked by conflict, intrigue, and extreme uncertainty, McNally shows how—even from the oil industry's first years—wild and harmful price volatility prompted industry leaders and officials to undertake extraordinary efforts to stabilize oil prices by controlling production. Herculean market interventions—first, by Rockefeller's Standard Oil, then, by U.S. state regulators in partnership with major international oil companies, and, finally, by OPEC—succeeded to varying degrees in taming the beast. McNally, a veteran oil market and policy expert, explains the consequences of the ebbing of OPEC's power, debunking myths and offering recommendations—including mistakes to avoid—as we confront the unwelcome return of boom and bust oil prices.
Robert McNally has written an excellent biography of a world-famous character, known for volatility and violent mood swings, sometimes reviled but always a player in the world economy and politics—the oil price. Insightful and timely, Crude Volatility explores the clash over many decades between "boom and bust" prices and the efforts to harness them. In the current market, McNally explains why volatility is likely to win out over stability—highly significant for what will remain the world's most important commodity for many years to come. Daniel Yergin, Pulitzer Prize winning author of The Prize and The Quest and Vice Chairman of IHS Markit
Pioneer's strong balance sheet and successful hedging program—before and since the latest price bust—depended largely on McNally's sound advice and his outstanding grasp of oil market dynamics and OPEC. This same expertise is on display in his lively book, which will help any reader understand the history of oil markets, and how we got to where we are today. Scott Sheffield, CEO, Pioneer Natural Resources
This is an important book. Bob McNally is the first to place shale oil in its proper historical context and explain the ramifications. His conclusions have profound implications for policymakers and the market. It would be unwise to venture out into this new and more volatile oil market without using McNally as your guide. Paul Horsnell, Global Head of Commodities at Standard Chartered
This completely fresh viewpoint from Robert McNally is a must read for anyone involved in the oil market. The historical perspective provided in Crude Volatility is critical to understanding the future of prices and the impact they will have on the geopolitical order in years to come. Buckle up for a wild ride! Paul Tudor Jones, founder of Tudor Investment Corporation and the Robin Hood Foundation
Splendid... McNally is both a skillful historian and an astute analyst... for readers who do not have the time to tackle Daniel Yergin's 900-page standard-bearer, The Prize (1990), Crude Volatility is a concise alternative for understanding the grand narrative of oil. R. Tyler Priest, Wall Street Journal
McNally uses history and two new oil data sets - on prices and global spare capacity - to explain that the greater the market imbalance, the wider the potential price swings, which in itself reinforces greater supply fluctuations. Anjli Raval, Financial Times
The most comprehensive treatment of concerted attempts to stabilize oil prices...Recommended. Choice
If you're an investor in the sector, a policy-maker or diplomat, or you just want a heads up about the next threats facing the global economy, read it. Petroleum Economist
Preface
Acknowledgments
Author's Note
Introduction: The Texas Paradox
I. The Long Struggle for Stability: 1859–1972
1. And Then There Was Light: From Chaos to Order in the Kerosene Era (1859–1911)
2. No Rockefeller, No Peace: Boom-Bust Returns
3. Why Are Oil Prices Prone to Boom-Bust Cycles?
4. The Texas Era of Price Stability: U.S. Supply Controls and International Cartelization (1934–1972)
II. The OPEC Era: 1973–2008
5. The Birth of OPEC: 1960–1969
6. OPEC Takes Control from Texas and the Seven Sisters: 1970–1980
7. OPEC's Rude Awakening: 1981–1990
8. OPEC Muddles Through: 1991–2003
9. Twilight: OPEC's Power to Prevent Price Spikes Ebbs and Vanishes: 2004–2008
10. Oil's Third Boom-Bust Era: 2009–?
Epilogue
Notes
Bibliography
Index

About the Author

Robert McNally is the founder and president of The Rapidan Group, a leading energy consulting firm, and a nonresident fellow at the Columbia University Center on Global Energy Policy. From 2001 to 2003, he served as the top international and domestic energy adviser on the White House staff.