Description

The Organization of the Oil Industry, Past and Present explains the various shifts in the balance of power between a group of large international vertically integrated firms (the Seven Sisters), and a group of oil producing countries (OPEC) in the fight for control over global oil markets. The article focuses on elements related to the extraction of petroleum, and the interactions between buyers and sellers of crude oil, as well as issues that are essentially linked to the Industrial Organization of crude oil markets. The Organization of the Oil Industry, Past and Present is organized as follows. After a brief introduction, Section 2 discusses the production of crude oil. Section 3 sheds light on the objectionable practices of John D. Rockefeller in his pursuit of control of the early petroleum refining industry. Section 4 discuses the problem known as the "rule of capture," as it relates to the excessive extraction of crude oil in the early days of the industry. Section 5 explains the tension and power shifts between the Seven Sisters and OPEC. Section 6 provides a conceptual discussion of cartel behavior that investigates the role played by reserves as a basis for Section 7, which empirically analyzes this conceptual result. Section 8 concludes the monograph by considering the impacts of recent events on the future of the oil industry.