In This Review

Following Oil: Four Decades of Cycle-Testing Experiences and What They Foretell about U.S. Energy Independence
Following Oil: Four Decades of Cycle-Testing Experiences and What They Foretell about U.S. Energy Independence
By Thomas A. Petrie
University of Oklahoma Press, 2013, 272 pp.
Market Madness: A Century of Oil Panics, Crises, and Crashes
Market Madness: A Century of Oil Panics, Crises, and Crashes
By Blake Clayton
Oxford University Press, 2015, 248 pp.

These two timely books on global oil markets, both written by financial analysts, are formally quite different. Petrie’s is more personal, even autobiographical, and emphasizes people, firms, and financial markets; Clayton’s is more scholarly, covers a much longer period of time, and focuses more specifically on the oil business. Still, both books make the same central point: the specific factors that drive the oil sector’s booms and busts vary, but the underlying dynamic does not change much. Markets expect high prices to last, leading to more conservation, new exploration, and technical innovations. In time, those factors overcome the apparent scarcity and even result in periods of overabundance. Then the cycle reverses, as consumption increases and exploration falls. Although both books were finished before the sharp drop in oil prices that began in mid-2014, their implicit message still applies: this too shall pass.