ABSTRACT
This chapter analyzes the characteristic of oil market. It provides an overview of the oil sector, stressing the role of technical change on the production and the utilization side, the complex and changing nature of the market forms. Oil is a complex sector, with a sequence of technologically diverse productive stages: exploration, production, transport, refining, and distribution of a number of distinct products, such as lubricants, gas-oil and gasoline. The chapter considers the issue of oil resources and reserves, showing the role of uncertainty and the fact that, contrary to widespread opinion, oil should be treated as a produced and reproducible commodity rather than as a non-reproducible natural resource. It explains the reference to the interpretation of Sraffian prices of production. The chapter describes that the traditional marginalist tools applied to account for the prices of exhaustible natural resources, such as the Hotelling theorem, cannot be of much help, since crude oil, while being by definition an exhaustible natural resource.
