The early years of the Fifties saw the completion of a grand strategic design started by the majors two decades earlier. Over the next twenty years the organisational structure which had been skilfully constructed on an international level was to guarantee a stability in nominal oil prices that had never been seen before (and was never to be seen again). It is certainly true that this price stability was considerably influenced by its state administered nature, and did not derive from the interaction of the free play of market forces. However this was exactly what the large firms wanted: to manage prices through control of the real flows of the market, so that they could guarantee themselves the stability considered necessary for the entire system to develop in harmony. The framework of certainties within which the firms were operating allowed them to fulfil the primary function of joint planning of the investments of the entire chain of industry, a state which they considered not easily reachable in a competitive context.
KeywordsMarket Price Fiscal Policy Spot Market Coal Industry Inertial Stability
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- 1.In 1953 two groups of independent newcomers, American Independent-Aminoil and Getty Oil, obtained concessions in the Neutral Zone (controlled by Kuwait and Saudi Arabia) where they found large quantities of oil, while in 1954 nine minor American companies had access, under pressure from the U.S. American government, to the newly formed and very important Iranian Consortium which was to control the majority of the Iranian production until the Seventies.Google Scholar
- 2.The crude oils exported onto western markets had reductions on average between 10% and 20% on the posted prices.Google Scholar
- 3.Mean prices of petrol and fuel oil (atz) net of taxes (doll./tonn.) Google Scholar
- 4.In Germany for example, the price ratio between coal and fuel oil in industrial usage (with the same thermal power) rose between 1957 and 1960 from 0.55 to 1.35 and in the domestic sector, from 0.67 to 1.21.Google Scholar
- 5.The director ofExxon stated in 1966 that European prices, which had fallen rapidly in 1964 and 1965, had gradually been stabilised at the end of 1965, showing slight signs of reprisal in 1966. Even more explicit was the director of BP who stated that “most of the merit, to the halting of price erosion, goes to the recent changes in the fiscal terms brought by the oil agreements in the OPEC area” (OPEC, 1967, p. 12 ).Google Scholar