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Published in:
2009 | OriginalPaper | Chapter
A Study of Crude Oil Price Behavior Based on Fictitious Economy Theory
Authors : Xiaoming He, Siwei Cheng, Shouyang Wang
Published in: Cutting-Edge Research Topics on Multiple Criteria Decision Making
Publisher: Springer Berlin Heidelberg
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The over fluctuating of international crude oil price has aroused wide concern in the society and the academics. Based on the theory of fictitious economy, this paper has studied and explained the crude oil price behavior from Jan 1946 to Dec 2008. It concludes that the long term prices of crude oil are subject to mean reversion in accordance with the decisive law of value, which is fluctuating around the long term marginal opportunity cost. However, at the same time the prices also appeared to deviate far from long term marginal opportunity cost for several relatively long periods. This paper highlights four aspects of this issue: the diversification of international crude oil market participants, the structural changes of the participants, the evolution of pricing mechanism, and the periodic change of world economy.