واکنش تولید نفت به تغییرات قیمت: یک برنامه تجربی از مدل رقابتی برای کشورهای عضو اوپک و غیر اوپک

Falling oil prices over the last decade, accompanied by over-production by some OPEC members and the growth of non-OPEC supply, warrant further empirical investigation of the competitive model to ascertain production behavior. A supply function, based on a modification of Griffin's model, is estimated using data from 1973–1997. The sample period, unlike Griffin's, however, includes phases of price increase (1970s) and price decrease (1980s–1990s), thus providing a better framework for examining production behavior using the competitive model. The OPEC results do not support the competitive hypothesis; instead, a negative and significant price elasticity of supply is obtained. This result offers partial support for the target revenue theory. For most of the non-OPEC members, the estimates support the competitive model. OPEC's loss of market share and the drop in the share of oil-based energy should signal adjustments in price and quantity based on a competitive world market for crude oil.

The soaring prices of crude oil brought about by OPEC's actions during the 1970s were associated with the recession in many oil-importing countries. The economic consequences, including rapid inflation, trade deficits, external debt and budget deficits, were the focus of many studies, for example Fried and Schultze (1975) and Marquez (1986). In response to the crisis, many countries highly prioritized strategies for the development of alternative sources of energy and the possibility of inter-fuel substitution in their economic development plans. Griffin and Gregory, 1976 and Pindyck, 1979 and Apostolakis (1990) have analyzed some of the implications of these strategies. After the first oil shock (1973–1974), OPEC was widely regarded as a potential force in the world oil market with vitality, stability and longevity. That conclusion or perception triggered a plethora of studies aimed at explaining pricing and production behavior; some of these include Blitzer et al. (1975), Fischer et al. (1975), Kalymon (1975), Cremer and Weitzman (1976), Hnyilicza and Pindyck (1976), Danielsen (1980), Newbery (1981), Verleger (1982), Griffin (1985) and Gately (1995). The methodologies employed in these studies include: (a) the theory of exhaustible resources; (b) game theory; (c) simulation; (d) industrial economics; and (e) economic efficiency hypothesis. Mabro (1992) critically evaluated some of these approaches. An important aspect of OPEC's production behavior is the propensity for some members to cheat on quotas; Griffin and Xiong (1997) examined this issue. MacAvoy (1982) added considerable credibility to the view that oil prices can be best explained by a model focusing on demand or supply (market fundamentals) rather than cartel behavior. Griffin (1985) examined four different production models for OPEC members using data for the period 1971–1983; these models are: (a) competitive model; (b) cartel model; (c) target revenue model; and (d) property rights model. Jones (1990) updated Griffin's cartel and competitive models using data from 1983:IV to 1988:IV. The limitation of Griffin's study is that the time period covered is one of only rising prices. Structural changes in the world oil market, the rapid growth of non-OPEC supply and the rapid decline in oil prices in the last decade, accompanied by over-production by some members of OPEC to enhance revenues, warrant further research to evaluate and forecast production behavior of oil exporters. Watkins and Streifel (1998) indicated the renewed interest in the competitive model of oil production. This paper estimates a supply function of oil production for oil producers (OPEC and non-OPEC) using data for the period 1973–1997. The methodology is an extension of Griffin (1985), with some modifications. The main significance of this study is the use of data that include phases of both rising and falling prices; therefore, the results should provide better estimates of production under price fluctuations. Central to the analysis is the estimation and the implication of the price elasticity of supply. A positively sloped supply function or positive elasticity of supply is consistent with the competitive hypothesis. We contend that OPEC's loss of market share, because of the rapid growth of non-OPEC sources of supply, should constrain OPEC's production to market forces; as such, a positive elasticity of supply is hypothesized. In addition, other production-related implications could be derived from the results; for example, a negative supply elasticity partially supports the target revenue theory (TRT), developed by Ezzati (1976), Cremer and Isfahami (1980) and Teece (1982), and empirically estimated by Griffin (1985). Based on OPEC's production behavior in the mid-1970s, the TRT postulates that production cutbacks occur in response to rising oil prices; that is, each exporting country faces a backward-bending supply schedule which will result if exporting countries try to satisfy a target revenue for internal investment purposes. This theory also explicitly implies that a fall in prices will result in output expansion. The importance of this study must be grasped within the framework of the evolution of OPEC as a major force in the world market and the implications of the results for oil-producing and oil-importing countries. Several factors are noteworthy. First, the rapid growth of non-OPEC sources of supply resulted in a significant drop in OPEC's market share, from 55% in 1973 to 42.7% in 1997. That loss was translated into a drop in oil revenues from $282 625 million in 1980 to $154 710 million in 1977.1 Second, the share of petroleum-based energy production fell from 31.4% in 1973 to 19.75% in 1997.2 Third, the oil glut in the 1980s, together with the rapid decrease in prices, was a great challenge to OPEC members trying to cope with the loss in oil revenues. The average spot price for crude fell from $36.68 per barrel in 1980 to $13.07 in 1998, with a record low of $10.41 in December 1998. Most of these countries are heavily dependent on oil exports as the main source of foreign exchange reserves that are urgently needed to finance current government expenditures and investments and to service foreign debt. Yousefi (1995) highlighted the importance of oil exports to the economies of OPEC members. In recent years, some members over-produced (cheated on quotas) to generate the revenues needed to finance long-term projects.3 The data in Table 1 indicate the magnitude of over-production, defined as the difference between output according to secondary sources and that communicated by member countries. Table 1. OPEC crude oil production Country Oil production (000 barrels/day) 1993 1994 1995 Secondary Cmc Diff Secondary Cmc Diff Secondary Cmc Diff source source source Algeria 751.4 745.0 6.4 746.3 751.4 −5.1 767.0 752.0 15.0 Gabon 296.6 289.6 7.0 327.0 296.9 30.1 346.0 302.0 44.0 Indonesia 1326.7 1327.3 −0.6 1327.8 1332.8 −5.0 1348.0 1328.0 20.0 Iran 3647.8 3425.2 222.6 3594.7 3595.2 −0.5 3602.0 3595.0 7.0 Iraq 495.5 659.5 −164.0 569.9 748.7 −178.8 588.0 737.0 −149.0 Kuwait 1852.7 1880.8 −28.1 2010.7 2006.6 4.1 2034.0 2007.0 27.0 Libya 1374.6 1361.0 13.6 1381.8 1389.8 −8.0 3093.0 1399.0 1694.0 Nigeria 1907.5 1878.7 28.8 1874.4 1820.9 53.5 1884.0 1843.0 41.0 Qatar 416.4 390.3 26.1 403.8 378.7 25.1 436.0 390.0 46.0 Saudi Arabia 8431.7 8047.8 383.9 8044.2 8049.0 −4.8 8061.0 8023.0 38.0 UAE 2491.7 2159.3 332.4 2183.8 2166.5 17.3 2194.0 2149.0 45.0 Venezuela 2323.6 2305.7 17.9 2459.5 2368.0 91.5 2641.0 2378.0 263.0 OPEC 24716.2 24470.0 246.2 24923.6 24904.5 19.1 25293.0 24903.0 390.0 Source: OPEC Annual Report 1994 and OPEC Annual Report 1995. Secondary source, oil production according to secondary sources; Cmc, oil production as communicated by member countries; Diff, the potential amount of over production equals the difference between secondary source and Cmc. Table options Production reaction to the fluctuating prices by producers could have important implications for economic development in these countries. Also, significant differences in the responses of OPEC and non-OPEC countries are important for the future stability of OPEC as a market-sharing cartel.

Over the last two decades there has been a proliferation of models aimed to explain the behavior of oil producing countries’ responsiveness to oil price changes. In light of the renewed interest in the market-determined model, we estimated the supply elasticity for OPEC and non-OPEC countries using data for a longer period than earlier studies. The results reject the competitive hypothesis for all OPEC members and offer support for the target revenue hypothesis. Furthermore, for most non-OPEC members the results are supportive of the competitive hypothesis. OPEC faces a challenging future. It has to survive under very competitive conditions because of: (a) increasing supply from non-OPEC sources; (b) new exploration and discoveries by small producers; (c) expansion of production capacity in some member countries, for example, Venezuela and Nigeria; (d) better drilling and exploration technology that could cut operating cost and lower price, for example, three-dimensional seismic surveys, floating platforms and horizontal drilling; and (e) economic cycles and recession in importing countries could create very volatile demand patterns. OPEC has to adjust to a market in which price and quantity are determined by unfettered demand and supply, and not by geopolitics or a cartel with some maverick members.4