Regularities in the formation of conjuncture and manipulations of the "invisible hand" on the oil market
Economy and Forecasting, 2016, issue 1, 95-116
The author has made a retrospective structural and institutional analysis of the world oil market. Periods were selected as well as five stages of the institutional structure of the oil market. The first phase (1859-1947) is characterized by relatively stable prices for raw materials based on the "one-base price system" controlled by the international oil cartel, which included the largest petroleum companies in the world, so-called "seven sisters." The second phase (1947-1971) is associated with the transition to the "two-base price system" with an increase in oil supplies from the Middle East. The third phase (1971-1985) is characterized by the end of the period of concession agreements, nationalization of deposits and transition to the cartel impact on price indices. Fourth stage (1985-2005) is characterized by the transition to stock market based oil trade, rising volatility and the development of risk management mechanisms. And the fifth stage (since 2005) is characterized by the dominance of financial instruments in the global oil trade. Based on the results of the factor analysis, the article reveals the main components that determine the situation and price dynamics during the recent phase of the oil market. Beginning with the middle of the first decade of XXI century, the oil futures market became segment of the monetary market instead of an independent commodity market whose conditions depend on the relationship between demand and supply, stocks of marketable goods and investments in the development of oil extraction. That is why the correlation of the quotations of oil futures with the dollar/euro ratios and other purely financial factors is so strong. The author considers essential features of the oil crises and the etymology of the term of "energy crisis." Currently, the researchers have only agreed to identify the first and second oil (energy) crises which had global implications and a marked impact on the world economic development. It is established that their essential feature was creation of an artificial shortage of oil supply on the cartel dominated market due to political factors. Instead, changes in the structure of the oil market and the rapid rise in prices in the middle of the first decade of this century gives reason to identify a third world energy crisis through the creation of an artificial surplus demand through the use of financial instruments. On this basis, a concept of "energy crisis", which unlike existing contains quantitative criteria (proportion) of price changes in the dominant primary energy resource balance. The article deals with the influence of the factor of "resource curse" on the economic dynamics and gives various examples of overcoming the "Dutch disease." In economic terms, resource wealth has a decisive impact on the economic dynamics of exporters. Only a few countries have ever managed to loosen this dependence by deregulating and liberalizing the energy markets, and by diversifying the use of the super-profits. The high correlation between economic growth and oil prices in the countries affected by "Dutch disease" significantly weakens their resistance to low oil prices. So we can assume that the minimum prices on the world oil market are, for such countries, the most striking economic sanctions. And overcoming this situation could be by searching a way to build new geopolitical structures, rather than by developing a more rational economic policy. The author assesses the impact of global conjuncture on the development of Ukraine's domestic oil products market. Significant reduction in world oil prices made almost no impact on Ukraine's consumer market of oil products, since it coincided with the devaluation of the national currency and introduction at the beginning of 2016 of the new excise rates on fuel sales. When the government has no effective levers to regulate the market (similar to an influential national vertically integrated oil company or strategic stocks of oil/oil products) it tries to influence the market through fiscal authorities, which only makes it possible to identify certain abuses committed by oil traders (in the form of unfair competition). And the state system of market surveillance for the quality of oil as an instrument of the new system of technical regulation is not working because of the inspections moratorium, which is part of the reforms aimed at economic deregulation. The study made various forecast based assumptions regarding the development of the conjuncture on the oil market. An important practical result of the study is justification for the fact that presently, against the background of the divergences in the export policy among the OPEC countries, the interests of the largest oil-importing and oil exporting countries largely coincide. This situation once again brings the conjuncture of oil market in the zone of turbulence. Both exporters and importers are concerned that the oil price stay within a certain corridor, whose lower limit ensures the exporters sufficient export revenues to maintain and increase oil production for their sustainable development, and whose upper limit does not prevent sustainable economic growth in developed countries and the global economy.
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