The Organization of the Oil Industry, Past and Present

For several decades, petroleum has been a commodity of vital impor-tance to the global economy, in which a number of interesting marketphenomena has occurred. This monograph represents my efforts todescribe several of these phenomenon, along with a few other elementsof the oil market. My focus is on elements related to the extractionof petroleum, and the interactions between buyers and sellers of crudeoil; issues that are essentially linked to the Industrial Organization ofcrude oil markets The topics I cover are: the production of crude oil,material that provides a foundation for later material; an example ofthe behavior employed by John D. Rockefeller in his quest for controlof the early petroleum refining industry; the excessive extraction phe-nomenon observed in the early days of the industry, which was obtainedbecause of the “common property” nature of oil production; the his-torical battle between the major oil companies (who were collectivelydubbed the “Seven Sisters” and Organization of Petroleum Export-ing Countries, or [OPEC]); a theoretical discussion of cartel formation,which forms the backdrop for an investigation of OPEC; an empiricalmodel of membership in OPEC; and a handful of key recent events,which offer some insights into the future of the oil industry. C. F. Mason. The Organization of the Oil Industry, Past and Present. Foundationsand Trends© in Microeconomics, vol. 10, no. 1, pp. 1–83, 2014.DOI: 10.1561/0700000051.Full text available at: http://dx.doi.org/10.1561/0700000051