OIL POLITICS AND ECONOMICS: HISTORY, THEORY AND EVIDENCE, SIXTEENTH-TWENTIETH CENTURIES

This dissertation examines historical and theoretical aspects of the relationship between oil politics and economics. The analysis is designed to reveal what combination of antecedent political and economic conditions led to the subsequent 1973-74 oil crisis. Few of the many past analyses of the oil embargo and oil price increases have shown even a minimum of historical knowledge about war-related trade disruptions, despite the historical importance of commerce-harassing as the classical strategy of weaker military powers. Fewer still have focused in a systematic way on the global consequences of the oil price increases that began in 1973, increases which produced two global recessions more serious than any since the 1930s. The history of oil politics and economics is decribed and explained in terms of shifts in three paradigms or general theories: the conservative, liberal and radical. Each paradigm contains propositions concerning appropriate or necessary levels of government intervention in economic affairs. Conservatives want a minimum of government policy planning and regulation. They believe that oil prices went up in the 1970s and early 1980s because of scarcity, and that these price changes were merely "market" phenomena rather than the result of international politics. Liberals, on the other hand, argue that the key variables associated with the oil crisis are political. In their view, the oil price increases presented the conservative paradigm of oil politics and economics with a fatal anomaly--the inability to solve the puzzle of oil policy and economic development with the tools at its disposal. The empirical evidence suggests that the political variables of the liberal and radical paradigms had more explanatory value than the strictly economic variables of their conservative counterpart. While liberals want renewed antitrust and regulatory enforcement in the oil industry, radicals insist on changes in the ownership structure of the means of oil production. Liberals and radicals share the view that only those countries with state structures strong enough to support and regulate domestic and international oil enterprises were able to solve the puzzle of oil policy and economic development.