Why Were We So Surprised?

It is an unusual and dramatic event when oil halves in price in a few months. Indeed, except for the crash of 2008 it has never happened before since 1900. (It dropped by two-thirds from the end ofWWI until the depths of the Depression in 1932 and it dropped 75% after the 1980 peak caused by the Iran-Iraq war and other factors, but in both cases it took several years.) This time, there we were, muddling through quietly, minding our own business, when, Bang!, it happened. Or that is how it felt to most people and most economic commentators. So what was going on? And how unexpected should it have been?