EGEE 120
Oil: International Evolution

Lesson 11 Readings

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Reading Assignments for Lesson 11

Students are to read chapters from the texts - The Prize and The Quest. The sections not listed are optional.

Chapter 35 - Just Another Commodity

Sections to Read
  • Introduction
  • The Fundamentals
  • Finally - The Cartel
  • "Our Price Is too High...."
  • From Eggs to Oil
  • New Oil Wars: The Shootout at Value Gap
  • The Mexican Weekend
  • The Death of a Major

From Text - The Quest: Chapter 8 -The Demand Shock

Section to Read
  • Financialization
Major Themes to Ponder as You Read
  • Oil becomes just another commodity
    • Prices are more volatile due to nature of supply & demand (Rockefeller)
    • Traders discover a price. Producers can influence price by controlling production
  • Oil, inflation, & interest rates
  • Risk is openly priced
  • Industry returns to drilling for oil on Wall Street
  • Sets the stage for major consolidation during 1990s

Chapter 36 - The Good Sweating: How Long Can It Go?

Sections to Read
  • Introduction
  • OPEC's Deepening Dilemma
  • Market Share
  • The Third Oil Shock
  • George H. W. Bush
  • Price Restored
  • Iran Vs Iraq: The Tide Turns

Major Themes to Ponder as You Read

  • Oil is just another commodity
  • Saudi Arabia emerges as dominant player
  • Lower oil prices
    • Benefits for consumers
    • Disadvantages for oil producers
  • Unique position of the USA
  • Oil trades around $20 for next 15 years (companies assume less)

Chapter 37 - Crisis in the Gulf

Sections to Read
  • Introduction
  • Iraq Moves
  • Miscalculation
  • The New Oil Crisis
  • The Lessons of Security
  • The Age of Oil

Major Themes to Ponder as You Read

  • Collapse of Soviet Union in 1989
  • Emergence of America as sole superpower
  • Restoration of American economy (deregulation, tax cuts, and free trade)
  • Illustration of market impact of no spare capacity-much higher prices
  • Harbinger of 2003-present

Epilogue

Sections to Read

  • Introduction
  • The Return of Oil
  • A New Oil Shock
  • “Running Out?”
  • Energy Security

Major Themes to Ponder as You Read

  • How does oil change international politics and the strategies and positions of nations?
  • What are the political and economic risks that come with oil, and how should we manage them?
  • Is the world going to run out of oil?
  • Is demand going to change?