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Inherent Difficulties in Producer-Consumer Cooperation

In August/September 1990 we experienced the first oil crisis brought on by the actions of consumers. That oil price run-up reflected the novelty of importing nations banding together to refuse to purchase oil -- rather than the unwillingness or inability of producer nations to supply oil.A writer from the United States, which until September 1990 was the world's second largest oil producer, might in the past have been expected also to "speak for" the producer countries. Now, however, America's appetite for energy has reached the point that it already imports one-third or more of the oil moving in international trade. At one time America's crude oil-production capacity could cushion the impact of supply interruptions on its partners. That was the case in the Suez crisis. But those days are long since gone. One must also recall that, in the days when the United States was the major supplier nation, its role was not always the benign one of cushioning the effects of supply interruptions. President Roosevelt's decision to cut off oil supplies to Japan in August 1941 may have precipitated Japan's decision to go to war.

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Energy Specializations: Petroleum – Policy and Regulation; Energy Security and Geopolitics – Geopolitics of Energy

JEL Codes:
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
Q48 - Energy: Government Policy

Keywords: Oil market, Producer-Consumer cooperation, OPEC, IEA

DOI: 10.5547/ISSN0195-6574-EJ-Vol12-No2-2

Published in Volume 12, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.