Baumeister Christiane, Kilian Lutz

It has been 40 years since the oil crisis of 1973/74. This crisis has been one of the defining economic events of the 1970s and has shaped how many economists think about oil price shocks. In recent years, a large literature on the economic determinants of oil price fluctuations has emerged. Drawing on this literature, the paper first provides  an overview of the causes of all major oil price fluctuations between 1973 and 2014. After, it discusses why oil price fluctuations remain difficult to predict, despite economists’ improved understanding of oil markets.