The energy shocks of the 1970's had significant effects on the global economy. Were they engineered by an effective cartel of OPEC members acting to share the market by controlling output and influencing market prices? If OPEC was an effective cartel sharing the market among its members, there would be a long-run relationship between each member's individual production and total OPEC output. On...

a r t i c l e i n f o JEL classification: D42 Q40 C61 Keywords: Quantity instead of price strategies OPEC Dynamic Stochastic and convex demand Uncertainty This paper analyzes the optimal strategy of a monopoly facing stochastic and dynamic demand and choosing a Cournot-type strategy, more precisely, adjusting its output. This investigation is motivated by the decisions of OPEC to adjust its out...

This study revisits the OPEC cartel hypothesis using a case study. A test is conducted to see if Venezuela has its production Granger cause its OPEC quota or whether the OPEC quota for Venezuela Granger causes Venezuelan production. The results show both occur at different times. In the short run, OPEC’s oil production quota for Venezuela Granger causes Venezuelan production. However, shortly a...

In November 2014, OPEC announced a new strategy geared towards improving its market share. Oil-market analysts interpreted this as an attempt to squeeze higher-cost producers including US shale oil out of the market. Over the next year, crude oil prices crashed, with large repercussions for the global economy. We present a simple equilibrium model that explains the fundamental market factors th...

a r t i c l e i n f o JEL classifications: C51 N70 Keywords: Crude oil price volatility GARCH Covariates Modified dummy variables OPEC announcements WTI crude oil Several times a year, OPEC hosts conferences among its members to agree on further oil production policies. Prior to OPEC conferences, there is usually rampant speculation about which decision concerning world oil production levels (n...

One of the objectives of OPEC is the security of demand for the crude oil exports of its members. Achieving this objective is imperative with the projected decline in OECD countries' crude oil demand among other crude oil demand shocks. This paper focuses on determining the external crude oil demand security risks of OPEC member states. In assessing these risks, this study introduces two indexe...