A decade ago, the states that make up the Organization of Petroleum Exporting Countries (OPEC) took a number of important steps to alter the structure of the world oil industry by encroaching on the prerogatives of the international oil companies. The producers unilaterally increased the “posted pri
A decade ago, the states that make up the Organization of Petroleum Exporting Countries (OPEC) took a number of important steps to alter the structure of the world oil industry by encroaching on the prerogatives of the international oil companies. The producers unilaterally increased the “posted price” for crude oil and boosted royalty and tax rates. They took over direct ownership of their crude reserves, and created state firms which subsequently took charge of oil operations in many (though not all) producing countries. The monopoly power of the international oil companies was further eroded a few years later when these governments slashed long-term supply contracts and undertook to sell their oil directly to consumer governments and small private traders.
OPEC’s accomplishments amounted to a series of economic and political “shocks” to most of the public in the Western industrialized countries, dependent to varying degrees on oil imports. The oil companies themselves had long been preparing for these developments and were poised to take advantage of them. Long before the capitalist centers experienced these first “oil shocks,” the US and European-based international oil companies (the “majors”) had begun a process of worldwide restructuring, or diversification. The impetus for this reorganization stemmed from two interrelated developments during the 1950s and 1960s. First, a number of Western “independent” oil companies -- both private and state-owned but without the international presence of the “Seven Sisters” -- penetrated the international production and trade of crude oil, primarily by securing relatively low-cost Middle East concessions. This helped to aggravate an “oil surplus” due to overproduction, which in turn depressed the price structure set by the majors. Oil company profits dropped along with prices, and the companies endeavored to share this burden by cutting tax revenues to the producing states. This in turn led directly to the creation of OPEC in 1960. OPEC also reflected the second phenomenon of this era, a rising nationalist sentiment in the producing states to achieve greater local control over the oil industry. These two developments were aspects of a single dynamic, as the improved concession terms offered by the “independent” companies stimulated further demands by the producer states.
Since the late 1960s, there was a widespread perception among the multinationals that greater state involvement could not be averted in the long run. New forms of contracts (joint venture, production sharing and service agreements) signaled further changes ahead. Anticipating this erosion of their traditional base of power, the large oil companies initiated a massive shift in investment strategy in the early 1960s. They directed their efforts to oil exploration and production outside OPEC, and to non-oil energy sources, primarily reserves in the industrialized countries themselves. By the middle of the 1960s, oil investments in the capitalist core states already exceeded those in the Third World. These initial outlays were made at a time when oil prices were low and falling, and would not permit more expensive non-OPEC energy production to compete on the world market. The fulfillment of the oil companies’ strategy therefore required higher prices. As for oil company interest in the OPEC states, nationalization meant a lesser role for the companies. At the same time, it assured them of stable, if lower, profits and it reduced their risk in new investment. State control in the producer countries also meant that the OPEC governments rather than the oil companies could take major blame for price rises.
Higher prices were crucial to the success of the companies’ diversification strategy in two ways. First, by greatly enlarging profits, higher prices were able to finance the development of non-OPEC oil and non-oil energy sources on a large scale. Net income for the 15 largest US oil companies was $11.7 billion in 1974 (up by 41 percent from the previous year), $19.5 billion in 1979 (up 65 percent over 1978), and $25.5 billion in 1980 (an increase of 30 percent over 1979). [1] Worldwide investments of the 26 largest oil companies jumped from $25 billion to almost $82 billion between 1972 and 1979. The percentage of total investments devoted to oil exploration and production expenditures steadily increased during the 1970s, to some 60 percent in 1980; accumulated 1973-1982 “upstream” outlays in the US alone stood at more than $175 billion. [2] ("Upstream" refers to the initial phases of the industry, such as exploration and well development. "Downstream" refers to product development and end use, such as refining and marketing.) Secondly, the higher world market price after 1973 surpassed production costs of most alternative oil and non-oil energy sources, making them competitive in many markets with OPEC oil.
US capital has been the main beneficiary of the oil industry’s huge non-OPEC investments. New exploration efforts in “frontier” areas (Alaska/outer continental shelf) had already begun in the late 1950s. Crude from the Prudhoe Bay field in Alaska, the largest oil structure ever found in the US, discovered in 1968, did not begin to reach markets until 1977.
The small OPEC oil price rise following the Tehran and Tripoli agreements of 1970-1971, and the subsequent 1973-1974 price explosion, reversed the steep decline in exploratory operations of the 1955-1970 period. This pace accelerated even further with the second “oil shock,” peaking in 1981. Now the high world market price relieved the competitive pressure which had been plaguing the US oil industry ever since the late 1940s. US oil production became quite profitable again after 1973, and by 1981 its profitability surpassed conditions elsewhere in the world. In that year, the US government completely removed all domestic price controls to stimulate exploration efforts, and, in 1981 and 1982, most firms reported record-level “upstream” expenditures.
During the 1970s, the large international oil companies dramatically increased their control over US reserves and production, either through their own exploration efforts or by way of acquiring smaller firms. Those oil companies producing in Alaska -- a “high-cost, high-risk” area -- are among the most profitable in the US. Although US production costs are considerably higher than those in most OPEC countries, the oil companies are able to achieve higher profits than the nominal fees they are accorded by OPEC governments. This is because the US government leaves them a very large share of the oil surplus revenue, the Windfall Profits Tax notwithstanding. The Windfall Profits Tax on US crude oil production is on the difference between the market price after decontrol and a tax base approximately equal to the controlled price level of 1979. The Reagan administration moved to reduce the Windfall Profits Tax for newly discovered oil in stages once market prices started to decline. In absolute terms, the total US surplus revenue is smaller than in the producer countries of the Third World, but the companies' respective share of it is highest in the United States.
The Reagan administration has not only allowed profits to surge, but also committed itself to a virtual sellout of public lands (former Interior Secretary James Watt set out to lease practically the entire US outer continental shelf as well as some designated wilderness areas to prospecting companies) and relaxed enforcement of environmental protection laws. While in the 1950s and 1960s US oil production made up only about 30 percent of the international oil companies’ worldwide equity output, it was well above 50 percent by 1981. Together with the US, the North Sea has received the great bulk of oil companies’ investments, reflecting the corporations’ intention to shift their resource base radically to the “safe” capitalist centers. Exploration in the North Sea dates back to the early 1960s, with production starting in 1971. Since the early 1970s, the British and Norwegian sectors have come to be regarded as one of the world’s major testing grounds for new offshore technologies. (In 1981, capital investments of some $6 billion in the British sector alone were equal to 40 percent of worldwide offshore investments. Total accumulated North Sea investment amounts to some $60 billion now.) Practically all the large oil firms have a stake in the development of North Sea resources, but British Petroleum (BP), Exxon and Shell control about 40 percent of the output of the British and Norwegian sectors combined. For a number of oil companies, the North Sea accounts for between 20 and 30 percent of their equity reserves, second in significance only to the US in the world.
Britain, the principal North Sea producer, experienced a dramatic nine-fold output increase between 1976 and 1982, making it the capitalist world’s fifth largest producer. This is largely due to government policy, which declined to impose any output ceilings whatsoever. The oil companies therefore were able to maximize output as fast as technically feasible -- a principal objective in light of their strategy to counter OPEC. British and Norwegian crudes have successfully penetrated the markets of OPEC’s African members -- Nigeria, Algeria and Libya -- whose oil is of comparable quality to North Sea crude. [3]
The average production costs of producing fields in the British North Sea are $7.50 per barrel. [4] At world market prices prevailing since the mid-1970s, costs were easily covered. In 1974, the oil companies wanted British government guarantees that the price for North Sea oil would not drop below $7 per barrel -- about the average production cost. The government then came out in support of Henry Kissinger’s “floor-price” proposal of 1975 that coincidentally envisioned a guaranteed minimum price of $7. In fiscal year 1981-1982, oil taxes accounted for one fourth of Britain’s total income tax levy, equal to 6.5 percent of total state revenue. Oil investments represented 20 percent of total British industrial investment in 1981. By delaying further plans for oil field development, the companies threatened to undermine future government tax income. A dispute arose, however, over the distribution of the surplus oil revenue. The British government’s attitude was initially cautious, as reflected in overall low taxation. By 1978, however, it had become clear that the companies were making large profits under existing terms. The government introduced new taxes carefully designed to increase its tax take without shooing away the companies. In absolute terms, profits remained very high, thanks to high world prices. When these prices showed signs of weakening in 1982, the oil industry successfully pressured the British government to undercut OPEC prices and secured tax concessions for future production.
Oil exploration and production has never been primarily determined by geological conditions. As a Geneva-based petroleum consultant recently put it, “Oil will be found in the 1980s where the rewards for the searcher are greatest, not necessarily where the geology is most favorable.” [5] The crucial questions are: who will appropriate how much of the total generated surplus revenue? Overall, the companies' relative share of surplus oil revenue is far lower now that before the “OPEC revolution.” In the US and Western Europe, despite higher production costs, oil company profits per barrel are considerably greater than the fees accorded to them by OPEC governments. This has provided a strong incentive for the international oil firms to shift much of their exploration and production efforts to these politically “safe” countries. [6] The US and Western Europe together account for 27 percent of the world's oil production now, although their share of world reserves is only about 10 percent. [7] As a result of the concentration of private investments in the capitalist centers, the non-OPEC capitalist world experienced a growth rate of its cumulative net additions to reserves in the order of 15 percent between 1972 and 1981. In the OPEC countries, reserve additions were equivalent to only 5 percent of production over the same period of time. [8]
The rise of non-OPEC producers in both industrial and underdeveloped countries has been a particularly important factor in diminishing OPEC’s role since 1979-1980. Those exporters have been ready to undercut OPEC prices in a slack market to maximize their own market share, while enjoying the advantages of rising prices in a tight market. “The non-OPEC exporter behaves, typically, as a newcomer mainly concerned with penetrating the market and securing a share for himself. The newcomer is concerned with volume, not with price administration.” [9] This is remarkably similar to the behavior of the “independent” oil companies after the mid-1950s.
While US oil production did not increase in the 1970s, new production stabilized its output level. In conjunction with reduced consumption after 1978, this helped neutralize the weight of oil imports in meeting US needs. US oil imports have dropped considerably during the last few years, alleviating the pressure of US demand on the world market. OPEC’s leverage over the oil market had depended, to a certain degree, on the extent to which the US relied on foreign supplies. The post-World War II trend towards increased US reliance on foreign supplies has been halted in a matter of a few years. OPEC oil now accounts for only 7 percent of total US oil consumption. But given the largely exhausted US oil resources, this change will only be temporary unless more use is made of the country’s vast non-oil energy sources.
Britain’s oil potential is similarly limited. It seems likely that Britain will once again become a net importer of petroleum in the 1990s (if not earlier).
A greater non-OPEC potential lies elsewhere in the Third World. Only about 15 percent of Mexico’s territory has been explored for hydrocarbons so far, and there is considerable speculation about future large discoveries. Mexico, now the capitalist world’s third largest producer, has the fourth largest oil reserves. Like Britain, Mexico engineered a dramatic six-fold jump in output between 1973 and 1982 in an effort to finance repayments of its huge foreign debt. [10] In 1978, oil revenue contributed only 29 percent of total export earnings, but amounted to almost 80 percent in recent years. (Similar to Mexico, Egypt is facing a large foreign exchange deficit. It is relying to a mounting degree on oil exports to repay and service its debt. While petroleum contributed only 10 percent to export earnings in 1973, it accounted for some 58 percent in 1980. Today, some 30 foreign oil companies are operating in the country. Through the Suez Canal and the large number of workers employed in the Gulf states -- two of the main pillars of the Egyptian economy -- Egypt is deeply enmeshed in the fate of the Middle Eastern oil industry beyond its own domestic operations.) The international companies have not been involved here: Mexico’s oil industry has been nationalized since 1938, and the country has pursued a relatively independent oil policy. Its financial troubles have recently caused it to fall in line with other non-OPEC exporters underselling OPEC in order to conquer a rising market share. Mexico’s oil exports are primarily to the US, and they have dramatically diminished Saudi Arabia’s and Nigeria’s market share there over the past few years.
The international oil companies have also put much hope and exploration money in the offshore resources of the People’s Republic of China, where they have been exploring in earnest since 1978-1979; several of them have now signed development contracts. The PRC’s potential crude reserves in the South China Sea are estimated to be some 40 to 100 million barrels (as compared to Mexico’s 48 billion barrels of proven reserves so far). [11] Most of the non-OPEC Third World has received far less attention from the companies than the capitalist centers. West Africa is an exception, because the geology is favorable and, according to Nicolas Sarkis, because “political pressure is stronger on oil firms in the North Sea than in most African states.” [12] Petroleum Intelligence Weekly has calculated that the companies make between $1 and $3 profit per barrel in underdeveloped countries, as opposed to a $5 to $10 margin in the industrial centers. [13] Apart from plain financial calculation, the corporations are obviously unwilling to take large political risks after their “OPEC experience.” Their move to diversify away from the (cheap) Third World resources to the (safe) industrial countries reverses the trend towards increased internationalization of production of this particular commodity that had been apparent since the 1920s and 1930s.
Overall, the companies’ withdrawal from areas where governments established direct control over production has been quite successful. The oil firms have retained as much presence as possible in those OPEC countries with little or nominal state control over production. Foremost is Saudi Arabia, whose vast oil reserves continue to lure foreign companies. An “incentive oil” program entitles companies to additional crude supplies in return for furnishing financial and technological assistance for Saudi Arabia’s refinery and petrochemical expansion plans. Those plants are going to be operated by 50/50 joint ventures between SABIC (the Saudi state entity) and the foreign company. (Exxon, Shell, Mobil, Dow and some Japanese firms are the major participants.) The seven major companies’ share of ownership of worldwide crude oil reserves had dropped significantly during the 1970s. By 1981, their share had increased again to the level of the mid-1970s. This newly strengthened ownership position reflects the control these corporations gained over resources in the capitalist centers, where none of the Western governments have moved to institute direct control over production. Of the seven majors, Mobil has about half of its worldwide reserves located in non-OPEC countries, Texaco and Gulf about 60 percent, British Petroleum, Exxon and Shell between 65 and 70 percent and Socal 81 percent.
The relatively small crude oil resource base of non-OPEC producers limits the international oil companies’ diversification effort in the long run: OPEC countries still control 67 percent of the world’s oil reserves. As in the case of petroleum, most oil industry investments in non-oil energy goes to the capitalist centers and a few other “safe” countries. The major capitalist states account for 56 percent of world coal reserves, 63 percent of all uranium (if South Africa and Namibia are added the figure is 80 percent), 58 percent of oil shale resources (the US alone controls 70-75 percent of high-grade ores), and some 50 percent of tar sands deposits.
Since the late 1950s, an unabated wave of takeovers has brought the coal industry under the grip of Big Oil. Today, the world’s 25 largest oil firms all own significant coal reserves. In the US, they control 46 percent of deposits and 25 percent of output. They also own and produce coal in Canada, Australia, South Africa, Columbia, Indonesia, China and other countries with low-cost deposits. Oil companies have also established a stronghold over coal conversion technologies. In some cases, these patents have been held since the 1930s, but only in the 1960s did these firms show an interest in exercising them. By 1975, oil companies accounted for 60 percent of all private research and development expenditures in the US, and they dominate energy technology development today.
Oil firms now own 55 percent of all US uranium reserves and produce more than 40 percent of total US output. They also operate in Canada, Australia, South Africa, Niger, Namibia, Gabon, Columbia, French Guyana, the Philippines and other states. The oil industry’s involvement in subsequent phases of the nuclear industry is less pronounced, with the exception of Gulf and Shell, but some companies operate very large fuel processing and reprocessing plants in the US and Western Europe.
Oil firms have also come to dominate the solar and geothermal industries. But it appears that their involvement is of a rather "preemptive" nature, trying to check any potential competition for their traditional oil business. In sum, the oil industry today has achieved a virtual all-energy monopoly. While it still produces relatively little alternative energy it owns the majority of deposits and controls key technology in the US and other countries.
Since 1979-1980, OPEC’s share of the capitalist world market has slumped from 67.4 percent in 1976 to 44.6 percent in 1982. [14] Despite a productive capacity of more than 30 million barrels per day (b/d), the OPEC total plunged to 14 million b/d in early 1983, and has now stabilized at a level of 17-18 million b/d. OPEC oil as a share of total primary energy consumption of the capitalist world amounted to only 13.6 percent in 1982, compared to 22.6 percent in 1979. OPEC has been pushed into the role of a marginal supplier, responsible for bearing the brunt of demand reductions. A number of structural factors have combined to reduce demand for OPEC oil and to undermine world market prices:
The pressures on OPEC from the structural reorganization of the energy industry were aggravated by the erratic buildup and drawdown of oil stocks owned and operated by the major companies. [15] Massive stocking in the wake of the 1979 Iranian revolution propelled spot prices to record levels. OPEC governments followed slowly, and adopted rather moderate increases of their official prices. Over the last few years, the volume of oil traded on spot markets swelled considerably, due to the unsettling of traditional marketing structures and the increase in short-term trading. The large oil companies influenced spot markets heavily to bring down prices in 1982. Slumping spot prices and continued underselling of OPEC by other key producers destabilized contract prices. OPEC producers have lost much of whatever control they enjoyed over pricing. At the current rate of output, OPEC is barely making inroads into oil inventories built up during the third quarter of 1983. [16] Advances which many states had made in the direct sale of crude oil since 1978 were largely undone. Through deals with consumer governments, OPEC had just started to make inroads into the oil companies' monopoly over marketing, still an important source of their power. The average estimated share of government-to-government deals for nine Middle Eastern and African OPEC members was 16 percent in 1977, reaching a peak of 37 percent in 1980. [17] In 1980, Iran sold all its petroleum exports in government-to-government deals; figures for Iraq were 85 percent, Saudi Arabia 30 percent, Nigeria 20 percent, and Indonesia 15 percent. Such deals were destined to a relatively minor role. [18] While OPEC governments were hanging on to their (higher) official prices, traders and consumer governments increasingly slashed supply contracts and went to the spot market to satisfy their needs: State-to-state deals have fallen off since 1981 almost as rapidly as they had previously increased. By 1982, they were back to levels only slightly above 1978. [19] This underscores the fact that merely selling the oil to (other) traders is not equivalent to direct control over marketing. This has largely remained the domain of the international oil companies. Saudi Arabia, which until recently relied on the Aramco companies to market 80 percent of its oil, is now considering acquiring marketing networks in Western Europe. Kuwait has already moved in this direction. But the OPEC nations generally are preoccupied with processing deals abroad on a spot-related price basis. Their direct access to Western markets remains of little consequence.
The downward pressure on oil prices and export volumes induced those OPEC members particularly dependent on stable oil revenues to cheat on the official price structure by offering special discounts. In Nigeria, the operating subsidiaries of the international oil firms severely cut back their offtake of Nigerian crude, refusing to reverse their action until the government agreed to increase the nominal profit margin accorded to them. Iran has declared it does not feel obliged to respect any OPEC pricing and output agreement. Internal socioeconomic contradictions and ideological differences have been aggravated by the organization’s crisis and conflicts between some member states have coincidentally exploded in military conflict.
Despite these pressures and schisms, though, the OPEC producers were able to limit the decline in prices to approximately 15 percent. The price and production agreement painstakingly worked out in early 1983 has so far proven to be “realistic.” Non-OPEC producers were ready not to rock the boat any further. Key exporters such as Britain and Mexico pledged not to cut their prices unilaterally. They realized that the growing competition among oil exporters -- while beneficial to them initially -- was about to threaten their common interests in the long run. Last May, Mexico adopted a temporary limit for its export volume of 1.5 million b/d.
Lower oil prices and shrinking export volumes have squeezed the revenues of OPEC countries from $250 billion in 1981 to $200 billion in 1982, and to an estimated $154 billion in 1983. [20] This has forced cutbacks in expenditures. Since 1981, the “high absorbers” (countries with large populations) have struggled with balance of payments deficits and dwindling financial resources. Nigeria, Venezuela and Indonesia had to reschedule debt payments and approach the International Monetary Fund for loans. They have embarked on austerity programs, cutting back imports by as much as 50 percent. This, in turn, has increased Western competition in “the scramble for Arab markets.”
The OPEC countries’ integration into the world economy and the spread of capitalist relations is continuing at a rapid pace, but the transformation of pre-capitalist features of society has been less than thorough. These societies face a basic predicament: Income from oil is a form of rent, which has to be transferred into forms of productive activity to enable society to benefit from it beyond the duration of the oil reserves. Most of these states have constructed physical plants based on their reserves of oil and gas. Despite these ambitious plans and projects, OPEC’s share of the world refining capacity has stagnated at between 5 and 6 percent. Refineries and petrochemical plants are only able to compete on an international scale through heavily-subsidized feedstock inputs. The expansion plans of the OPEC countries come on top of worldwide surplus capacities of 30 to 40 percent in these sectors. This will make it difficult for them to capture a share on the world market large enough to justify the huge investment costs. It would require product prices about 30 percent higher than those being assumed currently for the mid- and late-1980s for most of the new export refinery projects in the Middle East and North Africa to make even a minimal return on investment. [21] As OPEC itself has acknowledged,
The shift of refining activities to the Third World is not a problem for the industrialized world. With the uncertainties over future demand for oil products the West is happy to let Third World states build refineries at their own cost, providing industrial economies with convenient supplies of refined products when the need arises. If demand remains in the doldrums, it is the Third World refiners who have to cope with the overcapacity. [22]
Various OPEC countries have tried to tie the sale of crude oil to the purchaser’s decision to also take a certain proportion of refined products. Such “packages” have been successfully negotiated, but the exporters are now forced to price their products extremely low in order to keep them attractive.
OPEC is in a predicament that offers no easy solution in the short term. While at first Western commentators gloated over the stumbles of the “cartel,” there has been some recognition at the higher levels of capital that OPEC has served as a useful factor in the world oil market. As the Financial Times put it glibly: “Come back, OPEC, all is forgiven.” [23] After all, during the second “oil shock,” instead of imposing price increases of its own, the producers simply followed the upward trend of spot market prices (over which they have little leverage).
The surging oil revenues of the 1970s did serve to enhance the OPEC countries’ integration into the world economy. Higher revenues financed ambitious industrialization programs, which necessarily translated into huge inflows of imported capital goods. On the other side, the international oil companies’ diversification -- the development of non-OPEC oil sources in the short term, and control of non-oil energy sources in the longer run -- has called some of OPEC’s achievements into question. It has reduced their relative power to influence world market prices and to determine their output volumes. The multinationals have made up for ground they had lost in the 1970s. The 1973-1974 oil price rise allowed the realization of capital invested earlier. At home, they were able to retain much control over decisions relating to exploration and production. Increased production in the capitalist centers and other non-OPEC countries has reduced OPEC to the role of marginal supplier to the capitalist world.
For more than ten years, OPEC has expressed, like perhaps no other institution, the aspirations of the local bourgeoisies in the Third World. Many countries have followed its example. The old concession system has been largely eroded and replaced by improved contracts. Some 100 Third World countries have created their own state oil entities, and a number of them have successfully increased their level of local knowledge and control. On the other hand, the international oil companies’ move to diversify has called some of OPEC’s achievements into question; it has reduced their relative power to influence world market prices and determine their output volumes. The multinationals have blocked further fundamental change in the power equation between themselves and the oil producing states.
The companies’ own efforts to diversify, and the determination of many oil-importing Third World countries to produce oil indigenously (for either domestic needs or export) coincides with a measurable decline in oil consumption, mainly in the capitalist centers. A rising number of producer states are competing in a shrinking world market. Many of them remain dependent on oil company expertise in one or more stages of operations. In order to attract foreign companies as either operators or buyers of oil, they are compelled to compete against the US/North Sea “standard,” which offers highly favorable terms to private capital. A number of countries already have enacted or announced policy changes, especially eased taxation.
OPEC’s past success was to a certain degree dependent on a factor beyond its reach: the enormous increase in Western oil consumption in the 1950s and 1960s, facilitated by low price levels and coinciding with the decline of indigenous energy production capacities, put enormous pressure on available supplies and allowed OPEC to achieve the historic price rises of the 1970s. The current oil surplus can be seen as a consequence of the continuing struggle between the majors and OPEC. New supplies from non-OPEC sources and the structural decline in Western oil consumption have virtually transformed this previous constellation of factors. The international oil companies are taking advantage of this development to strengthen their ownership position, enlarge their share of the surplus revenue and carefully restructure their operations on a truly worldwide scale. Without a more coherent policy within OPEC and a measure of cooperation from non-OPEC producers, the companies might well be able to dominate the scene again.
[1] New York Times, October 3, 1983. [2] Petroleum Economist Times, October 3, 1983. [3] Norway’s North Sea tax regime is generally considered to be somewhat tougher then Britain’s. But recently, reflecting pressure and decreasing investment by the industry, the government has announced important tax concessions. See Petroleum Intelligence Weekly, October 24, 1983, p. 8, and August 15, 1982, p. 12. [4] Only four fields indicate costs above $10 per barrel; fields currently under development are reported to cost $13 per barrel on average. Petroleum Times Price Report, March 1, 1982, pp. 1-2. [5] Petroleum Intelligence Weekly, September 27, 1982. [6] Essential decision-making related to exploration and production is left to the companies in these countries. In contrast, Canada’s federal government attempted to implement a more national-oriented oil policy, denying the dominating US companies the favorable treatment they receive in the US. As investors fled, Canada was forced to offer tax exemptions and institute a program of payments to companies exploring in the Arctic Beaufort region. New York Times, October 26, 1983, and September 21, 1983. [7] Financial Times Energy Economist (April 1983). [8] OPEC Facts and Figures (1982), p. 27. [9] Financial Times Energy Economist (April 1983), p. 10; and BP Statistical Review of World Energy (1982), p. 19. [10] Robert Mabro, “The Changing Nature of the Oil Market and OPEC Policies,” Middle East Economic Survey, September 20, 1982, Supplement, pp. 1-9. [11] New York Times, September 1, 1982, and OPEC Bulletin (October 1983), pp. 86-89. [12] South (January 1982), pp. 62-63. Also, the Sudan is playing an increasing role in Socal’s oil search. Sudan’s regime provides a favorable “climate” for foreign investment. [13] Petroleum Intelligence Weekly, January 7, 1982, pp. 7-8. [14] BP Statistical Review of World Energy (1982), p. 19. [15] See Paul Aarts and Michael Renner, “Het Dodelijke Medicijn voor de OPEC?” Economisch Statistische Berichten (Rotterdam, The Netherlands), June 22, 1983, pp. 560-561. [16] See Petroleum Intelligence Weekly, November 7, 1983, p. 5. [17] Ibid,, February 8, 1982, p. 4. [18] See Brian Levy, “World Oil Marketing in Transition,” International Organization (Winter 1982). [19] Petroleum Economist (July 1982), pp. 269-272; and Petroleum Intelligence Weekly, February 8, 1982, pp. 3-4. [20] Wirtschaftswoche [West Germany], February 4, 1982, p. 23. [21] See Petroleum Intelligence Weekly, October 17, 1983, pp. 6-7. [22] OPEC Bulletin (October 1983), p. 78. [23] In an editorial on February 24, 1982.
