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The Seven Sisters versus OPEC: Solving the mystery of the petroleum market structure

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  • Noguera, José

Abstract

This paper provides an explanation of the changing behavior of the crude oil market and tests it using the U.S. data from January 1913 to September 2014. We claim that the crude oil market has experienced two important structural breaks in its industrial organization. The first occurred when Venezuela and the Arab crude oil exporting countries forced the so-called Seven Sisters to sign the Fifty–Fifty profit-sharing agreements. The second occurred after OPEC succeeded in cracking the secrets of the international crude oil marketing and in undertaking the wave of nationalizations of the 1970s.

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  • Noguera, José, 2017. "The Seven Sisters versus OPEC: Solving the mystery of the petroleum market structure," Energy Economics, Elsevier, vol. 64(C), pages 298-305.
    • Handle: RePEc:eee:eneeco:v:64:y:2017:i:c:p:298-305
    DOI: 10.1016/j.eneco.2017.03.024
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    References listed on IDEAS

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    1. Noguera, Jose & Pecchenino, Rowena A., 2007. "Corrigendum to "OPEC and the international oil market: Can a cartel fuel the engine of economic development?" [Internat. J. of Ind. Organization 25 (2007) 187-199]," International Journal of Industrial Organization, Elsevier, vol. 25(4), pages 875-877, August.
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    7. James D. Hamilton, 2011. "Historical Oil Shocks," NBER Working Papers 16790, National Bureau of Economic Research, Inc.
    8. Roger Fouquet (ed.), 2013. "Handbook on Energy and Climate Change," Books, Edward Elgar Publishing, number 14429.
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    10. Lutz Kilian & Robert J. Vigfusson, 2013. "Do Oil Prices Help Forecast U.S. Real GDP? The Role of Nonlinearities and Asymmetries," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 31(1), pages 78-93, January.
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    17. Bamberg,J. H., 1994. "The History of the British Petroleum Company," Cambridge Books, Cambridge University Press, number 9780521259507, October.
    18. Noguera, Jose & Pecchecnino, Rowena A., 2007. "OPEC and the international oil market: Can a cartel fuel the engine of economic development?," International Journal of Industrial Organization, Elsevier, vol. 25(1), pages 187-199, February.
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    2. Vicknair, David & Tansey, Michael & O'Brien, Thomas E., 2022. "Measuring fossil fuel reserves: A simulation and review of the U.S. Securities and Exchange Commission approach," Resources Policy, Elsevier, vol. 79(C).

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    More about this item

    Keywords

    Petroleum; Structural breaks; Market structure; Seven Sisters; OPEC; Fifty–Fifty legislation;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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