Competition, control and price formation in the international energy industry

Cyrus Bina

Research output: Contribution to journalArticlepeer-review

13 Scopus citations

Abstract

The purpose of this paper is to show that, since the early 1970s, the market prices of all energy sources have been regulated by the market value of crude oil at the international level, which in turn depends upon the magnitude of individual value (or production price) of production units located within the least productive oilfields of the continental USA. Thus, historically and methodologically, the globalization of the petroleum industry together with the preponderant influence of US oil capital over other energy sources, especially its control over US coal, can be considered as, first of all, the fundamental basis of an all-embracing energy industry consisting of all sources and, second, the driving force behind the internationalization of capital in the energy industry. In this manner, the individual capitals associated with the production units belonging to traditionally autonomous industries (such as coal, oil, and natural gas industries) had to compete directly with each other regardless of the immediate use-values produced, according to the law of intra-industry rather than inter-industry competition. Here, contrary to the conventional wisdom, we argue that the control of oil capital over other energy sources that has resulted in further integration leads to further competition in the sphere of production within the entire energy industry worldwide.

Original languageEnglish (US)
Pages (from-to)162-168
Number of pages7
JournalEnergy Economics
Volume11
Issue number3
DOIs
StatePublished - Jul 1989
Externally publishedYes

Keywords

  • Global energy
  • Oil prices
  • Theory of competition

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