SOAS Research Online

Abstract

The position that the petroleum industry occupies today in the Economy of the various producing and consuming countries, and the inter-relations of these countries based or derived from the oil business has given this industry an international character. The petroleum industry, however, was subjected to certain changes by the transference of its centre of gravity from the Western Hemisphere to the Eastern, with the emergence of the latter as the major source of oil exports. The United States by itself had exerted a powerful influence over the international oil industry, particularly over prices and over the pricing system used while it was a net exporter of oil, that is, up to 1948. The influence on prices managed to persist, however, up to the mid-fifties due to the various international events that followed: the Korean war (1950), the nationalization of the Iranian oil industry (1951), and the Suez crisis (1956-1957). It is only after the United States established voluntary controls in 1957 and later in 1959 mandatory quotas, when market forces began to play a dominant part in the international industry. There is logically a parallel line of thought with respect to the Venezuelan oil industry. It had also been under the influence of the American industry until 1959, and since then Venezuela has also been receiving the impact of market forces. However, this country has been susceptible to the strongest impact having the highest production cost amongst the major exporting countries, and thus, under the prevailing competitive situation, has been losing position in world in markets with respect to Middle Eastern and frican sources. O.P.D.C. However Venezuela believes th t with the creation of O.P.D.C. competition among sources can be prevented, and that with a coordinated policy among O.P.E.C, members, they can become insulted from the effects of competition among oil companies. I believe that the weakness of this theory lies in the first assumption. With the present work I hope to clarify in some degree the situation of the petroleum industry in Venezuela, and its position within the international scene. Needless to say, this will involve many political and social considerations, but because they are so entagled with the economics of the petroleum industry, they will be unavoidable.