Kisswani, Khalid/ M. (2011): The effects of the U.S. price control policies on OPEC: lessons from the past.
Download (187Kb) | Preview
In 1973-1974, the U.S. faced the so-called “Energy Crisis” due to the Arab oil embargo and a quadrupling of world crude oil prices by OPEC. This led the U.S. to use a” Price Control” policy in the domestic energy market. The effects of such policy are explored and well documented. However, the responses of OPEC producers to such a policy need further attention. This paper examines the effects of these price controls on OPEC‟s extraction path. It also examines the relation between the harm function and the change in OPEC production. The results show some evidence that OPEC did respond differently to price controls applied by the U.S. For some periods it cut production, while in other periods production levels increased. The results also show some evidence regarding Wirl (2008) that OPEC includes political support as part of its objective function when it comes to oil extraction.
|Item Type:||MPRA Paper|
|Original Title:||The effects of the U.S. price control policies on OPEC: lessons from the past|
|Keywords:||OPEC, Price Controls, Energy Economics, Oil|
|Subjects:||C - Mathematical and Quantitative Methods > C0 - General > C00 - General
C - Mathematical and Quantitative Methods > C2 - Single Equation Models; Single Variables > C20 - General
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q4 - Energy > Q40 - General
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q30 - General
|Depositing User:||Khalid Kisswani|
|Date Deposited:||09. Nov 2011 20:47|
|Last Modified:||12. Feb 2013 14:35|
1. Agarwal, V. B., Deacon, R. T., (1985). Price Controls, Price Dispersion and the Supply of Refined Petroleum Products. Journal of Energy Economics. 7(4), 210-219
2. Camm, F., (1983). Market Behavior under Partial Price Controls: the Case of the Retail Gasoline Market. Rand Corp. No. R-2613-DOE/RC.
3. Frech III, H. E. , Lee, W. C. , (1987). The Welfare Cost of Rationing-By-Queuing across Markets: Theory and Estimates from the U. S. Gasoline Crises. The Quarterly Journal of Economics. 102 (1), 97-108.
4. Kalt, J. P., (1981). The Economics and Politics of Oil Price Regulation. MIT Press. Cambridge, MA. 5. Karp, L., Newbery, D., (1991). OPEC and the U.S. Oil Import Tariff. The Economic Journal. 101(405), 303-313.
6. Kisswani, K., (2009). Economics of Oil Prices and the Role of OPEC, University of Connecticut, Working paper.
7. Smith, R. T., Phelps, C. E., (1978). The Subtle Impact of Price Controls on Domestic Oil Production. The American Economic Review. 68(2), 428-433.
8. Wirl, F., (2008). Why Do Oil Prices Jump (or Fall). Energy Policy. 36 (3), 1029–1043.