Just about the only thing we know about where oil prices are headed over the next few years is that most of the forecasts will be wrong. The oil market has defied every attempt to fix or predict prices in terms of oil’s value to customers, the marginal cost of production, or the price of available substitutes. “It was to me an economic aberration that oil remained much cheaper than Evian mineral water,” the deposed shah of Iran wrote in his memoir justifying his efforts to push for higher prices in the 1970s. Mohammad Reza Shah Pahlavi thought oil should be intrinsically valuable because it was the source of more than 70,000 different products, including petrochemicals as well as fuels (“Answers to History”, 1980). But more than a […]