The New Oil Price Leadership And the WorId Price of Oil
Authors: Debanne Joseph  G. 
Published: March 2010

Abstract
The petroleum industry has been facing, since the late sixties, a growing malaise due to a conjlict of interest between the underdeveloped petroleum-exporting countries (OPEC) and the technologically advanced, petroleum-importing counties of OECD. The essence of the conflict concerned the apportionment of benefits from petroleum reserves exploitation.
The multinational oil cartel which traditionally acted as agent of OECD and which had, until 1971, exclusive control over the price of oil, lost this control in the ajtermath of the October 1973 war. This considerably reduced the ability of the multinational oil cartel to negotiate on behalf of OECD and has brought the oil-importing countries in more direct contact with the petroleum-exporting countries. The trend for bilateral agreements has ominous implications for the multinationals and has triggered a sharp controversy between the U.S. and the European member's of OECD.
This paper attempts to fathom the long-term implications of these developments on the price and on the supply of petroleum and its substitutes.
The salient conclusion is that accelerated development of OPEC counties and associated states would provide a sustained impetus for high production rates to ease, if not to fully satisfy, the indigenous petroleum deficit of the oil-importing countries. Concurrently, accelerated technology transfer from the technologically advanced countries of OECD to the developing countries of OPEC would provide OECD countries with a good deal of, if not all, the petro dollars needed to pay for oil imports.
The price of oil is expected to remain at about the same level in constant dollars as it at the present time, unless a real technological breakthrough makes available abundant and less expensive liquid fuel substitutes for the transportation sector. Concurrently, tile new oil price leadership, i.e; OPEC, is expected to maintain its control over the price of oil and to maintain its cohesion and leadership as long as Saudi Arabia remains within OPEC; that is for at least one decade and probably two.

Introduction
THE PRICE LEADER THEORY to explain the oil pricing mechanism was first presented in 1969 to model the oil supply and distribution system in North Americ.acu. This theory is updated in this paper in the light of recent events, in particular the emergence of n new price leader(Saudi Arabia), which has assumed the responsibilities that were formerly Exxon's (Standard Oil of New Jersey), the uncontested leader of the multinational oil cartel and the ultimate arbiter on oil pricing since the formation of the cartel in 1928(2).
The inner workings of the multinational cartel remained secret except for rare historic agreements; accordingly the writer describes its apparent policies as reconstructed through observation of the cartel's actions over the years rather than from the analysis of declarations and minutes. Fortunately, either by accident or by design, the deliberations of OPEC are reported by the world press, which makes it much easier now to study the new oil price leadership, its policies and inner workings