The price of oil

The price of oil has confounded so many commentators so often in the past that there are few people close to the industry who are willing to make any public predictions. Although conscious of rushing in where more prudent economists have feared to tread I would nevertheless offer the judgement that the world market price of crude oil might be expected to decline modestly in real terms over the remainder of this decade. "The price in real terms" means that the nominal price of oil will not rise as fast as an index of the nominal price of manufactures during the period concerned. This brief paper will outline two reasons why this is the case