OPEC and World Crude Oil Markets from 1973 to 1994: Cartel, Oligopoly, or Competitive?

Alhajji, Anas F.; Huettner, David A.

doi:10.5547/issn0195-6574-ej-vol21-no3-2

Cited by 130 publications

(99 citation statements)

References 37 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…First, compared with the US price of domestic crude oil (WTI oil price), which was regulated during the 1980s, the RAC for imported crude oil is likely to be a better proxy for the price of oil in global markets. Supportive evidence can be found in Kilian (2009), Alhajji and Huettner (2000), Baumeister and Peersman (2013), and many others. Second, because the process to construct the oil shocks is based on the work of Kilian (2009) Effects of oil shocks on the long-/short-term volatilities of oil prices…”

Section: Datamentioning

confidence: 99%

What Drives Long-term Oil Market Volatility? Fundamentals versus Speculation

Yin

Zhou

2016

Economics

View full text Add to dashboard Cite

This paper explores the role of speculation and economy fundamentals in the oil market using a two-component GARCH-MIDAS model. Specifically, the authors highlight the different roles played by the changing oil shocks with respect to the short-term and long-term components regarding oil market volatility. The results indicate that a global demand shock is the only factor found not only to be positive but to also significantly increase long-and short-term oil volatility in the full sample. This is consistent with a classic host of research that advocates that global demand dominates the oil market. However, since 2004, impacts of other oil shocks have been significantly weakened or even reversed. For example, the speculative demand shock has helped to stabilize long-term oil volatility during the post-2004 period. The results also suggest the existence of asymmetric impacts on short-term oil volatility, particularly for shocks from oil supply, oil-specific demand and oil speculative demand. JEL Q43

show abstract

Section: Datamentioning

confidence: 99%

What Drives Long-term Oil Market Volatility? Fundamentals versus Speculation

Yin

Zhou

2016

Economics

View full text Add to dashboard Cite

show abstract

“…al. (1999), Huettner (2000a &2000b), Spilimbergo (2001), and Ramcharran (2002), remains largely inconclusive regarding the behavior and impact of OPEC despite the best efforts of those authors. Few interesting hypotheses have been rejected and therefore little has been clarified regarding OPEC's actual or intended influence on the market.…”

Section: Notes On the Literaturementioning

confidence: 99%

“…3 How to distinguish the two empirically? Alhajji and Huettner (2000b) focus on the estimated price elasticity of demand for OPEC (or alternatively, Saudi) oil, noting in particular that a monopolist would not choose to operate on the inelastic portion of its demand curve. Thus, estimated demand elasticities numerically below -1 would constitute evidence not inconsistent with the cartel hypothesis.…”

Section: Notes On the Literaturementioning

confidence: 99%

“…The very foundation of this approach, themselves and it is only an illusion; and (c) the military expenditures of each country can be rationalized in part as protection to ensure the security of that nation's oil reserves and production facilities, but those expenditures remain the same whether output rises or falls by 10 percent; i.e., they are fixed rather than variable. 12 Alhajji and Huettner (2000b) estimate the elasticity of world oil demand (E w ) to be -0.251 and the elasticity of non-OPEC supply (E no ) to be 0.290 (see their Table 2). The elasticity of residual demand for OPEC oil (E o ) can then be inferred from the formula: E o = E w /s -E no (1-s)/s, where s = OPEC's share of world output.…”

mentioning

confidence: 99%

See 1 more Smart Citation

Inscrutable OPEC? Behavioral Tests of the Cartel Hypothesis*

Smith¹

2005

The Energy Journal

137

View full text Add to dashboard Cite

We show that standard statistical tests of OPEC behavior have very low power across a wide range of alternative hypotheses regarding market structure. Consequently, it is difficult, given the current availability and precision of data on demand and costs, to distinguish collusive from competitive behavior in the world oil market. This, along with other factors, may account for the largely inconclusive nature of findings so far reported in the empirical literature on OPEC. We apply a new approach for examining alternative hypotheses and find strong evidence of cooperative behavior among OPEC members. Our results also suggest that OPEC's formal quota mechanism, introduced in 1982 to replace a system based on posted prices, increased transactions costs within the organization. We do not find strong evidence to support the view that Saudi Arabia has played the role of dominant producer within the cartel. (JEL: D43, L11, L13, Q41)

show abstract

“…During 2009-2012, US oil supply grew, on average, at a sustained annual rate of 6.7%, while non-OPEC oil supply produced outside the Unites States was stable, on average. 3 The US share in total non-OPEC supply jumped to more than a quarter in 2012, compared to just over a fifth in 2008. In 2012, US shale oil accounted for 2.5% of world oil supply.…”

Section: The Size Of the Us Shale Oil Revolutionmentioning

confidence: 99%

Quantitative effects of the shale oil revolution

2015

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractThe aim of this paper is to analyze the impact of the so-called "shale oil revolution" on oil prices and economic growth. We employ a general equilibrium model of the world oil market in which Saudi Arabia is the dominant firm, with the rest of the producers as a competitive fringe. Our results suggest that most of the expected increase in US oil supply due to the shale oil revolution has already been incorporated into oil prices and that it will produce an additional increase of 0.2 percent in the GDP of oil importers in the period 2010-2018. We also employ the model to analyse the collapse in oil prices in the second half of 2014 and conclude that it was mainly due to positive unanticipated supply shocks.

show abstract

OPEC and World Crude Oil Markets from 1973 to 1994: Cartel, Oligopoly, or Competitive?

Cited by 130 publications

References 37 publications

What Drives Long-term Oil Market Volatility? Fundamentals versus Speculation

What Drives Long-term Oil Market Volatility? Fundamentals versus Speculation

Inscrutable OPEC? Behavioral Tests of the Cartel Hypothesis*

Quantitative effects of the shale oil revolution

Contact Info

Product

Resources

About