It would be impossible to get a clear idea of how things work in the oil industry by referring merely to its basic economics. This would exclude the political aspect, which has always been vital to the workings of the oil market. With the arrival of oil the development of modern economies, at first centred around the national coal industries, became detached from direct or part ownership of its essential energy supplies. The countries which previously dominated the industrial economy became progressively dependent on other countries for their energy supplies, causing both economic and political vulnerability.
KeywordsEuropean Economic Community Producer Country International Agencyfor Energy British Petroleum Consumer Country
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- 1.This conflict of interests has occurred many times (both in the past and today) and, in the mid-70s, for example, it prompted the American government to propose the idea of a floor price for petroleum to its European partners, ostensibly in order to defend "common interests", but actually in order to protect its domestic production. This proposal, not having any counterpart, was not successful.Google Scholar
- 2.This distinction was particularly evident during the second oil crisis (1978-80). when Germany and Japan openly declared that they would take no steps to stop rising oil prices, so that the market would be left to ration out demand.Google Scholar