Crude oil is the most important energy source in global perspective. About 35 percent of the world’s primary energy consumption is supplied by oil, followed by coal with 25 percent and natural gas with 21 percent.Economic growth in the past was accompanied by growing oil consumption. But in recent years the growth of the supply of oil has been slowing and production has now practically reached a plateau. This is happening despite historically high oil prices. It is very likely that the world has now practically reached peak oil production and the world oil production will soon start to decline at initially probably increasing rates.Price of oil is following a pricepath which was first analyzed by Hotelling and later a lot of extensions were added to it. The real price development shows casual outcomes and considerable deviation from the theoretical price. In this thesis I summarize the most important theory elements, give some outlines on historical development of oil market, formation of price system, economical fundamentals of oil market and oil extraction on Norwegian continental shelf. At the end I compare volume for Norwegian oil production over time and price level for the same years and make evaluation how “successful” or “unsuccessful” Norway has been in relation to the price development and how the price development has been in relation to the expectation when the exploration just started.