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OPEC, the gulf and the world petroleum market: A study in government policy and downstream operations
Book reviews O P E C - recent past and future outlook OPEC BEHAVIOUR AND WORLD OIL PRICES
by James M. Griffin and DavidJ. Teece George Allen and Unwin, London, 1982, 240 pp, hardback £15.00, paperback £5.95 OPEC, THE GULF AND THE WORLD PETROLEUM MARKET: A STUDY IN GOVERNMENT POLICY AND DOWNSTREAM OPERATIONS
circumstances in which OPEC's solidarity might collapse. Teece is not really in disagreement with Adelman, but puts more emphasis on the search for target revenues. In the past, OPEC served to ratify breakthroughs made by a few nations. Today, he can see circumstances in which individual OPEC members will seek to expand output as their target revenue goals increase.
Saudi A r a b i a
by Fereidun Fesharaki and David T. Moran's chapter is the most politically sophisticated of the three main Isaak chapters, arguing that Saudi Arabia has
Westview Press, Boulder, CO, USA, unwillingly been forced into a priceand Croom Helm, London, 1983, 288 determining role within OPEC, and that one cannot understand OPEC pp, $18.95
These are two of the more reflective books on OPEC. The one by Griffin and Teece concentrates primarily on reinterpreting the recent past - what has made OPEC tick, and why has it been successful? The volume by Fesharaki and Isaak, while touching on some of the same issues, looks more to the future - toward OPEC's development strategies. Both are good. The Griffin and Teece book has emerged from a conference on the future of OPEC and oil prices. In it, three authors (Adelman, Teece and Moran) each argue a different case about the nature of OPEC. Adelman argues for OPEC being a loosely-knit oligopoly or cartel. He rejects concepts such as the 'backward-bending supply curve', and suggests that the OPEC 'core' is now faced with ensuring that declining demand for OPEC's oil does not leave them (as the marginal producers) with nothing to sell. He sees
ENERGY POLICY December 1983
of treading over old ground in a chapter on oil reserves and likely production and export policies, but even that is well presented and argued. The book's strength is in its chapters on refining and shipping, where the authors draw quite heavily on their modelling work at the East-West Center in Hawaii. In the case of refining, they show how the Gulf states are pressing ahead with a considerable programme of refinery construction. They do not try to argue that there is an overwhelming economic case in favour of the OPEC states, but they do point out that the swing away from heavy products means that established refiners in the consumer world are being forced to invest in more flexible upgrading facilities. In these circumstances, the O P E C countries have a much better chance of entering the industry, than if their technology was not developing. This is an empirically strong book, which is particularly good on refining and shipping, though its more perfunctory chapters on petrochemicals and gas are still adequate. It can be read profitably in conjunction with the preceeding one by Griffin and Teece.
Authoritative insight pricing policies without looking carefully at Saudi motives, which range For one thing, Fesharaki actually from wanting to keep other OPEC worked with Iranian delegations to members happy to seeking a satisfac- O P E C under the Shah, and his obsertory political relationship with the vations on the internal workings of that organization have a touch of authority USA. These three chapters are well argued, sometimes lacking in the writings of and they are presented within a context purely North American authors. of other chapters which concentrate on Fesharaki and Isaak leave their readers traditional cartel theory, recent with the final thought that, should the developments in the oil market, and O P E C membership extend its downthe policy implications for the import- stream investments, then a new type of ing nations. This is by far the best book security problem will be created, in that I know of which deals with the reallocating oil products carried in dynamics of OPEC. The quality of all producer-owned tankers will be harder the contributors is good. For what it is than the reallocation of crude oil in worth, there is a general acceptance 1973 happened to be. amongst the contributors that $32 per barrel oil was unsustainable in the medium term.
OPEC s t r a t e g y Fesharaki and Isaak concentrate on the strategy of the OPEC membership toward refining, petrochemicals, oil transport and gas exports. There is a bit
Louis Turner London Business School British Ins#tutes'Joint Energy Policy Programme
373
by James M. Griffin and DavidJ. Teece George Allen and Unwin, London, 1982, 240 pp, hardback £15.00, paperback £5.95 OPEC, THE GULF AND THE WORLD PETROLEUM MARKET: A STUDY IN GOVERNMENT POLICY AND DOWNSTREAM OPERATIONS
circumstances in which OPEC's solidarity might collapse. Teece is not really in disagreement with Adelman, but puts more emphasis on the search for target revenues. In the past, OPEC served to ratify breakthroughs made by a few nations. Today, he can see circumstances in which individual OPEC members will seek to expand output as their target revenue goals increase.
Saudi A r a b i a
by Fereidun Fesharaki and David T. Moran's chapter is the most politically sophisticated of the three main Isaak chapters, arguing that Saudi Arabia has
Westview Press, Boulder, CO, USA, unwillingly been forced into a priceand Croom Helm, London, 1983, 288 determining role within OPEC, and that one cannot understand OPEC pp, $18.95
These are two of the more reflective books on OPEC. The one by Griffin and Teece concentrates primarily on reinterpreting the recent past - what has made OPEC tick, and why has it been successful? The volume by Fesharaki and Isaak, while touching on some of the same issues, looks more to the future - toward OPEC's development strategies. Both are good. The Griffin and Teece book has emerged from a conference on the future of OPEC and oil prices. In it, three authors (Adelman, Teece and Moran) each argue a different case about the nature of OPEC. Adelman argues for OPEC being a loosely-knit oligopoly or cartel. He rejects concepts such as the 'backward-bending supply curve', and suggests that the OPEC 'core' is now faced with ensuring that declining demand for OPEC's oil does not leave them (as the marginal producers) with nothing to sell. He sees
ENERGY POLICY December 1983
of treading over old ground in a chapter on oil reserves and likely production and export policies, but even that is well presented and argued. The book's strength is in its chapters on refining and shipping, where the authors draw quite heavily on their modelling work at the East-West Center in Hawaii. In the case of refining, they show how the Gulf states are pressing ahead with a considerable programme of refinery construction. They do not try to argue that there is an overwhelming economic case in favour of the OPEC states, but they do point out that the swing away from heavy products means that established refiners in the consumer world are being forced to invest in more flexible upgrading facilities. In these circumstances, the O P E C countries have a much better chance of entering the industry, than if their technology was not developing. This is an empirically strong book, which is particularly good on refining and shipping, though its more perfunctory chapters on petrochemicals and gas are still adequate. It can be read profitably in conjunction with the preceeding one by Griffin and Teece.
Authoritative insight pricing policies without looking carefully at Saudi motives, which range For one thing, Fesharaki actually from wanting to keep other OPEC worked with Iranian delegations to members happy to seeking a satisfac- O P E C under the Shah, and his obsertory political relationship with the vations on the internal workings of that organization have a touch of authority USA. These three chapters are well argued, sometimes lacking in the writings of and they are presented within a context purely North American authors. of other chapters which concentrate on Fesharaki and Isaak leave their readers traditional cartel theory, recent with the final thought that, should the developments in the oil market, and O P E C membership extend its downthe policy implications for the import- stream investments, then a new type of ing nations. This is by far the best book security problem will be created, in that I know of which deals with the reallocating oil products carried in dynamics of OPEC. The quality of all producer-owned tankers will be harder the contributors is good. For what it is than the reallocation of crude oil in worth, there is a general acceptance 1973 happened to be. amongst the contributors that $32 per barrel oil was unsustainable in the medium term.
OPEC s t r a t e g y Fesharaki and Isaak concentrate on the strategy of the OPEC membership toward refining, petrochemicals, oil transport and gas exports. There is a bit
Louis Turner London Business School British Ins#tutes'Joint Energy Policy Programme
373