Crude oil prices declined forty percent between October 1 and Christmas Day in 2018. The decrease has been variously attributed to the United States’ failure to follow through on its tough sanctions on Iran, unexpected increases in US oil production, oil-exporting countries not cutting production sufficiently, and/or realizations that global economic growth was slowing. These explanations are all relevant. However, none can explain a decline that matches in magnitude the decrease that occurred after OPEC’s November 2014 meeting. At that time, the organization surprised the world by ending its self-imposed limits on its crude oil output. Nothing like that happened in the fourth quarter of 2018. The best historical precedent for the precipitous drop in oil prices happened in equity markets in October 1987. On Black Monday, October 19, a “flash crash” dropped share prices twenty-two percent in a single day. In a report named for then-Secretary of Treasury […]