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The Clumsy Cartel

M.A. Adelman

Year: 1980
Volume: Volume 1
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol1-No1-5
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Abstract:
The recent price explosions in the world oil market result from the tardy recognition of the post-1973 consumption slowdown. Such odd results could not happen in a competitive market, but they are not at all strange in the world of the cartel. An analogy may help explain. A diver in the sea cannot go lower than the sea floor, nor higher than the water's surface. He is nearly weightless, and can float at any depth between these extremes, but the slightest impact or effort sends him up or down. Similarly, in any market, the price cannot drop below incremental cost, since such a drop would choke off supply, nor can it rise above the level that would maximize profit to a monopoly, since the monopoly would gain by putting the price back down. But in a once-competitive market, where the price has been rising toward some unknown monopoly optimum, the price can hold steady or can move drastically up or down in response to very slight impulses. In this range the price may show no response, or even a perverse response, to changes in demand. Since 1973, price response has been perverse. This was clearly the case in 1974, as the world headed into recession. It is so again in 1979.During 1973-1978, real incomes in the non-Communist indus-trialized countries rose 13 percent, but oil use nevertheless was flat at approximately 50 million barrels daily (MBD). Exports



Mideast Governments and the Oil Price Prospect

M.A. Adelman

Year: 1989
Volume: Volume 10
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol10-No2-3
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Abstract:
The Mideast oil-producing nations are the heirs of the multi-national oil companies whom they gradually expropriated, starting around 1950. They have inherited the companies' problem: repressing investment and production.



Is the World Oil Market 'One Great Pool'? -- Comment

M.A. Adelman

Year: 1992
Volume: Volume 13
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol13-No1-9
No Abstract



The World Oil Market: Past and Future

M.A. Adelman

Year: 1994
Volume: Volume 15
Number: Special Issue
DOI: 10.5547/ISSN0195-6574-EJ-Vol15-NoSI-2
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Abstract:
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.



Costs of Aggregate Hydrocarbon Reserve Additions

M.A. Adelman and G. Campbell Watkins

Year: 2004
Volume: Volume 25
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol25-No3-3
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Abstract:
`Oil Equivalence' is widely used to measure total hydrocarbon activity. Natural gas is converted to oil using a fixed factor, usually based on thermal measurement. In turn, expenditures on oil and gas are divided by such `oil equivalence' volumes to define unit costs, especially of reserve additions. This approach lacks economic content. We show its implicit assumptions and constraints, and develop an alternative aggregation method using index numbers, with an example.



Reserve Prices and Mineral Resource Theory

M.A. Adelman and G.C. Watkins

Year: 2008
Volume: Volume 29
Number: Special Issue
DOI: 10.5547/ISSN0195-6574-EJ-Vol29-NoSI-1
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Abstract:
NOTE. Gordon Campbell Watkins was my friend for forty years. He freed me, as the Scots poet says, from many a blunder and foolish notion. We joined forces twenty years ago, when the basic data on hydrocarbon scarcity were starting to disappear. (Adelman and Watkins, 1996). A revised updated version was given in 2002 at an IAEE session in Prague. The last paper of our last effort follows, delayed by his death and my ailments. We are indebted to the Center for Energy and Environmental Policy Research at MIT for continuing aid. Without Therese Henderson and Jeanette Ehrman, the work could not have been completed. Errors in this final revision are mine alone.





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