On Monday, 12 February, Robert McNally, veteran energy expert, author, and consultant, gave a talk on "Volatility of Oil Prices and Society". The presentation reviewed the history of oil markets through the prism of oil price volatility with a special emphasis on its impacts on society. This led to a discussion of historical strategies used to limit oil price volatility and how current and prospective market conditions vary from those of the past. McNally stressed the centrality of oil to global society and how extreme price fluctuations can have cascading effects on the world economy.
Mr. McNally pointed out that as OPEC has loosened its grip over the past ten years, the oil market has been rocked by wild price swings, the likes of which have not been seen for eight decades; thus, describing the consequences of OPEC's lessening of control whilst offering recommendations, for how global societies might confront the unwelcome return of boom and bust oil prices.
Tracing the history of markets from the US oil fields of the 1860s to today's oil market which is highly dependent on the Middle East, McNally explained how past periods of stability and volatility in oil prices help us understand the new boom-bust era. McNally emphasized that oil's notorious volatility has always and should be considered not just a scourge afflicting the oil industry, but also a source of instability in the broader economic and geopolitical landscape. Tracing a history marked by conflict and extreme uncertainty, McNally illustrated how harmful price volatility prompted industry leaders and officials to undertake extraordinary efforts to stabilize oil prices by controlling production. Society requires stable oil prices, argued McNally; hence governments need to plan long-term and develop a variety of strategies during times of relative stability so as to protect their economies from inevitable fluctuations in supply and demand that lead to periods of boom and bust.
Mr. McNally's stimulating and topical presentation was well attended by faculty and students from numerous departments. His talk was followed by a lively question and answer session.