The history of the oil industry has repeated periods of both low and high commodity prices and boom or bust cycles. The actual price received for the product becomes the most critical factor in profitability once the hydrocarbon has been found. Unfortunately it is the least understood although the most non-technical factor. Most experts attempt to use reserves or perceived lack of reserves to estimate future product prices. The author believes this is incorrect. Price is determined partially by supply and demand and indirectly by reserves but, most importantly, by deliverability to the market. The author believes history can be a useful guideline in predicting future price trends and periods of boom or bust. Understanding these historical trends and creating company models of price prediction is as critical to making correct business decisions as any reservoir model or probability methodology.

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