From Monopolistic Stability to Competitive Instability
The industry and the oil market have emerged radically modified from the second petroleum crisis. A new phase, the fifth, has begun, in which the free forces of the market and the competition once and for all seem to prevail over any dominating position of the great multinationals, over every form of their oligopolistic co-ordination and over every cartel policy. Price formation is regulated by competition and the market. An increase in the number of figures dealing with each other daily, the disappearance of long-term contractual relations, the organisational destructuring of large integrated groups, cause an absolute unpredictability and volatility in prices in a highly uncertain framework. As was the case during the first phases of the take-off and development of the industry, variations often in double percentage figures are observed daily. “When there is much supply and demand, and both are uncertain and subject to vast seasonal or annual fluctuations, the conditions are created in which the forces of demand and supply on the free markets change in continuation. This play of uncertain economic forces produces constant fluctuations in the prices, thus giving rise to the creation and success of the futures markets” (Hieronymus, 1982, p. 21). New forms of transactions, of the paper type and typically financial, appear alongside physical transactions and there is a gradual increase in the volumes traded. The level of information available on the market increases, as well as its transparency and efficiency. The combination of the physical and economic globalisation of the markets with their financialisation has helped to accentuate price instability. Anything that happens in a Texas refinery or an oil platform in the North Sea, even the slightest change in climate or political tension tends to impact, in real time, on the whole world price structure (of crude oil and products) and on all contracts in both the physical and paper markets. Oil seems therefore to have lost its specificity and become like any other commodity, such as grain, copper or bacon (handled on the New York futures market). Thus it follows that public policies have also lost much of their reason for existing, unless the reason is to reduce their influence to make the markets even more efficient.
KeywordsFuture Market Future Price Future Contract Physical Market Spot Prex
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- 2.The most significant case was the suppression in France of the 1928 law which gave the state the monopoly of the importation of oil and products.Google Scholar
- 3.The most significant cases are: British Petroleum Co. entirely privatized in three stages in 1979 (5% with profits for £551 m), in 1983 (7% for £566m) and in 1987 (36.8% for £7,240m): YPF in Argentina collocated for 45.3% in 1993 for more than $3bill.; ENI in Italy with two collocations: the first in 1995 (about 15% for Lit. 6,300 bill.), the second in 1996 (about 18% for Lit. 8,500 bill.); Repsol in Spain was privatized for 19% in 1995 and for 11% in 1996, thus reducing state participation to 10%.Google Scholar
- 4.The figure refers to 1994 with a fiscal revenue for the G7 of $240 bill. compared with $120 bill. profits from oil exports from the OPEC countries.Google Scholar
- 7.The data comes from Brown L. et al. (1996), Vital Signs 1996,from the Worldwatch Institute.Google Scholar