Analysis of world equilibrium prices, supply, demand, imports, and exports of crude oil and petroleum products
Since OPEC quadrupled crude oil prices in 1973, many predictions have been made that indicate OPEC crude oil prices will decline. Two years since, OPEC countries have adjusted prices upward to cover their losses due to worldwide inflation. This study is an attempt to reassess the world oil market and OPEC's revenue-maximizing price strategy. The purpose of this article is to address a series of widely asked and critical questions about the world petroleum market in 1980. These questions are: 1. What will be the 1980 equilibrium supply, demand, and prices for crude oil and petroleum products for major regions of the world. 2. What will be revenue-maximizing pricing policy for the OPEC member countries. 3. What will be the 1980 worldwide flow and value of trade in crude oil and petroleum products among the major regions of the world. 4. What is the potential degree of the United States dependency on OPEC oil. After applying the model used by Houthakker and Kennedy, but using modified parameters, it is concluded that under apparently reasonable assumptions, the present level of OPEC prices will not be revenue-maximizing in 1980, and higher prices (around $14 to $16 per barrel in 1973 dollars) could be charged by OPEC countries if they decide to maximize their income as a group. The implications for the United States are that they should immediately develop alternate sources and not postpone these projects. (MCW)
- Research Organization:
- Federal Energy Administration, Washington, DC
- OSTI ID:
- 7363658
- Journal Information:
- J. Energy Dev.; (United States), Journal Name: J. Energy Dev.; (United States) Vol. 1:2; ISSN JENDD
- Country of Publication:
- United States
- Language:
- English
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CHARGES
DEMAND FACTORS
ECONOMIC POLICY
ENERGY SOURCES
ENERGY SUPPLIES
FORECASTING
FOSSIL FUELS
FUELS
INTERNATIONAL ORGANIZATIONS
MARKET
OPEC
PETROLEUM
PETROLEUM PRODUCTS