Noted energy economist James Hamilton just spoke at GMU. The two most interesting things he said:
1. OPEC has almost no effect on world oil prices; most countries produce less than their quota, and when countries want to produce more, their quota goes up.
2. The price of oil follows a random walk. But the oil industry isn't trying very hard to develop new sources because oil execs believe that the price of oil is mean-reverting (i.e., what goes up must come down). Why are the oil execs so wrong? Hamilton's guess: They're putting too much weight on their last big experience with high oil prices in the 70s and 80s.