11001 - 4 - The Price of Oil Roberto

A number of reasons have motivated our choice of oil, along with its past and expected future price evolution, as the subject in focus for the present book. A fi rst reason is the importance of oil in the world economy. In the early 2010s, the annual production value of this commodity, when measured at international prices, could be assessed at between $3500 and $4000 billion. World oil exports were reported in a range of $2200 and $2800 billion. As is clear from Table 1.1 , oil dwarfs other leading primary commodities in the service of humanity. Oil’s dominance among commodities was apparent already before its spectacular price rises after 1972. In 1970–1972, oil alone represented an export value equal to the aggregate of the next nine largest commodities (Radetzki, 1990 ). Oil’s importance is not limited to the primary commodity universe. It also stands out in the global macroeconomy. The value of oil production in 2013 corresponded to 4.8 percent of global GDP, while the export value it generated was equal to some 12 percent of global goods trade. A second reason why an investigation of oil and its price evolution has special signifi cance is the “indispensability” of this