The World Oil Market: Past and Future
The Energy Journal, 1994, vol. Volume 15, issue Special Issue, 1-11
Private owners of world oil resources eventually failed to restrain abundance and keep an above-competitive price. The OPEC nations had far greater market power, but overestimated it. Short time horizons drove OPEC nations to raise the price too much. They retreated to a more tenable level. But like all cartels, they find it hard to reconcile group welfare with short-run individual interest. Oil continues abundant, so far. The main obstacles to noncartel expansion are man made such as taxation and state companies. They are very slowly yielding. Depending on how fast they erode, world supply will grow, and price pressure will be downward.
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