Abstract

This paper discusses the functions - production, transportation, processing and marketing - required to supply petroleum in response processing and marketing - required to supply petroleum in response to the demand generated in the markets of the free world, and it emphasizes their interdependence. It also appraises the political, economic, and technical factors that have recently caused significant changes in the historical supply-demand pattern. Finally, it attempts to project future trends in supply and demand.

Introduction

In February, the Los Angeles area suffered a severe earthquake - over 60 people were killed, and property damage amounting to several hundred million dollars was incurred. This earthquake was not predicted although many scientists were actually making local stress measurements for that specific purpose. The principle reason for this failure was that, the quake was caused by principle reason for this failure was that, the quake was caused by movement along the San Gabriel Fault - not along the San Andreas Fault, where the measurements were being made. Following the major quake, after shocks were felt for several months before a state of unstable equilibrium was finally attained. This seismic phenomenon, in a very real sense, has its analog in the international petroleum industry; i.e., we can observe the stresses that are present, but we can predict neither the location of the epicenter nor the intensity of the shock. Stresses were evident last fall in Libya, the Arabian Gulf and Venezuela; however, the major disturbance did not occur until the Organization of Petroleum Exporting Countries (OPEC) confronted the major international oil companies in Teheran during February of this year. Aftershocks have since been felt in Libya, Venezuela, Nigeria, Algeria, and elsewhere. As a result of these shocks, the roles of the major international oil companies, as well as those of the producing and consuming countries, have been drastically altered - OPEC has assumed the initiative; the influence of the majors has begun to decline significantly and the importing countries have started to react. These changes will affect pricing, price stability and, ultimately, energy policies throughout the world.

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