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Monday, September 22, 2008

Oil

The oil market is one of the most discussed themes and yet there are more things we don't know than thing things we do know. Let's look at some features which describe this market
  • Resource constraint, supply is limited
  • Huge initial investment required with high risk of failure
  • Self-regulated oligopoly on the seller side and buyer side (oligopsony?)
  • Huge exogenous effects (crises etc)
  • Unpredictability of future price
  • Low price elasticity

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