The Price of Oil and Conflict in OPEC

Ali M. Reza

The Energy Journal, 1984, vol. Volume 5, issue Number 2, 29-34

Abstract: The price-setting behavior of the oil-exporting nations is influenced by the various elasticities of demand for and supply of oil, and the long-run optimal price trajectory is also influenced by the rate of interest and reserves (see, for example, Pindyck, 1978, and Reza, 1981). Since it is generally agreed that the long-term price elasticity exceeds the shortterm elasticity (in absolute value), measuring the latter can give a clearer picture of the former. The short-term price elasticity of demand for OPEC oil is also of interest because short-term financial constraints have apparently led at least some members of OPEC to weigh the short-run outcome of their pricing decisions more heavily. The issue addressed here is the magnitude of the short-run price elasticity of the demand for oil supplied by the OPEC core (Saudi Arabia, Kuwait, the United Arab Emirates, and Qatar) and of OPEC as a group.

JEL-codes: F0 (search for similar items in EconPapers)
Date: 1984
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