The analysis follows the historical development of the oil industry, going over the various stages taking place since its beginnings in 1859 up to nowadays. The reason is that each of these shows structural characteristics, economic and political dynamics which cannot be immediately attributed to the traditional life cycle of an industry and which indeed can no longer be repeated. There are two aspects which run horizontally through these historical dynamics. The first is the way in which the basic conditions of the oil economy have influenced the behavior of the various players and in particular of the oil companies, according to the specific external context in which they were operating. The second aspect is the way the companies have attempted to respond to the challenge that has through the whole history of the oil industry: how to reconcile (short-term) competition with (long-term) stability of the markets. The initial phases, characterized by ruinous competition followed by close oligopolistic coordination, were followed by the disappearance of unequal relations of strength between producer states and companies that led to the predominance in international markets of conditions of broad, thought not perfect, competition. The last chapter is focused on the recent market dynamics characterized by two opposite phases: 1) a fast and unexpected escalation of oil prices, mainly driven by the financial transactions on futures markets implemented by non-commercial operators; 2) a deep and fast drop in prices driven by word economic recession: this condition born in US and then spread in a lot of country around the world. In this mentioned last period, the consequent collapse of oil demand, due to the economic recession, caused an oversupply condition on the oil market with bearish effects on oil prices. This dynamic hides a potential and dangerous bullish factor: the investment’s paralysis. The oil price fall by 100 U.S. Dollars per barrel in 4 months (in 2008) and the international credit crunch are writing off investment along the whole oil chain, especially in the upstream activities. The low level of oil prices and the restriction of credit market access forced the oil companies to review, postpone and cancel several projects for being no longer profitable in this new business environment. In addition to this renewed reluctance to invest, a new element of pressure appears on the supply side: the fast and high decline rates in several non-OPEC oilfields. Are these ones warning signals of a new oil prices escalation?
A.Clò, L.Orlandi (2009). Petroleum Economics. OXFORD : Eolss Publisher.
Petroleum Economics
CLO', ALBERTO;
2009
Abstract
The analysis follows the historical development of the oil industry, going over the various stages taking place since its beginnings in 1859 up to nowadays. The reason is that each of these shows structural characteristics, economic and political dynamics which cannot be immediately attributed to the traditional life cycle of an industry and which indeed can no longer be repeated. There are two aspects which run horizontally through these historical dynamics. The first is the way in which the basic conditions of the oil economy have influenced the behavior of the various players and in particular of the oil companies, according to the specific external context in which they were operating. The second aspect is the way the companies have attempted to respond to the challenge that has through the whole history of the oil industry: how to reconcile (short-term) competition with (long-term) stability of the markets. The initial phases, characterized by ruinous competition followed by close oligopolistic coordination, were followed by the disappearance of unequal relations of strength between producer states and companies that led to the predominance in international markets of conditions of broad, thought not perfect, competition. The last chapter is focused on the recent market dynamics characterized by two opposite phases: 1) a fast and unexpected escalation of oil prices, mainly driven by the financial transactions on futures markets implemented by non-commercial operators; 2) a deep and fast drop in prices driven by word economic recession: this condition born in US and then spread in a lot of country around the world. In this mentioned last period, the consequent collapse of oil demand, due to the economic recession, caused an oversupply condition on the oil market with bearish effects on oil prices. This dynamic hides a potential and dangerous bullish factor: the investment’s paralysis. The oil price fall by 100 U.S. Dollars per barrel in 4 months (in 2008) and the international credit crunch are writing off investment along the whole oil chain, especially in the upstream activities. The low level of oil prices and the restriction of credit market access forced the oil companies to review, postpone and cancel several projects for being no longer profitable in this new business environment. In addition to this renewed reluctance to invest, a new element of pressure appears on the supply side: the fast and high decline rates in several non-OPEC oilfields. Are these ones warning signals of a new oil prices escalation?I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
