The Oil Price In Perspective

Abstract

Saudi Arabia's Finance and Economic Minister examines the response of the Western oil-importing countries to the world energy situation from the perspective of the oil producers' concern for long-run resource availability and economic development. He says the era of overproduction to produce cheap and abundant fuel for the consuming countries ended in 1973 when the producing countries began exercising control over their own resources, providing the impetus for oil prices to begin following the laws of supply and demand. To establish the economic consequences of oil-price increases since 1974, he compares the current-account balances of major oil-exporting countries, industrial oil-importing countries, and non-oil developing countries. Development assistance to the latter group from the Organization of Petroleum Exporting Countries is shown to balance the unfavorable trends of the industrial countries. The need to moderate the pace of development, however, is noted along with the importance of assigning an appropriate policy of use and valuation of oil. (DCK)