Abstract

This article confirms that OPEC is neither a cartel nor exhibits any sign of market domination, market control, or monopoly. This confirmation is also in accord with the pioneering account of the competitive differential oil rents formed across the global industry since the crises of the 1970s. The methodology utilized in this study is known as the event-study, an innovative econometric method which attempts to investigate the possible influence of OPEC decisions on output upon the global oil spot and futures prices during the period of 1983-2005. The significance of this investigation is due to the fact that the apparent ``lumpiness" of OPEC has to have no bearing on a priori acceptance of ``perfect competition" as opposed to ``imperfect competition"—a tautological hallmark of neoclassical theory utilized in the bulk of both orthodox and heterodox literature on oil. And, by implication, neither has the neoclassical parlance of rent, as ``market imperfection" and/or ``market power," any bearing on the globally competitive differential oil rents earned by the rentier states. OPEC is reflective of the competitive differential oil rents earned by its members; and, contrary to both the right and the left, and their obfuscating echo in the media, it rolls with the heavy-handed punches of global market in the present epoch. This study is rather a posteriori investigation that deals with the reality of competition in the Schumpeterian framework—a reality that, far from the fiction of textbook competition, is neither perfect nor imperfect.

Erratum

Page 8, paragraph 1, line 11, which concludes the sentence as ``its queue from the newly structured global market", should read ``its cue from the newly structured global oil market."

Page 29, paragraph 1, line 11, which concludes the sentence as ``(t-statistics is -3.3382 and p-value is 0.0206)", should read ``(t-statistic is -3.3382 and p-value is 0.0206)."

Recommended Citation

Bina, Cyrus and Vo, Minh (2007) "OPEC in the Epoch of Globalization: An Event Study of Global Oil Prices," Global Economy Journal: Vol. 7 : Iss. 1, Article 2.
DOI: 10.2202/1524-5861.1236
Available at: http://www.bepress.com/gej/vol7/iss1/2