Book Reviews

• Author: Jean-Marie Chevalier
• DOI: 10.1177/0003603X7401900224
• Published date: 01 June 1974
• Date: 01 June 1974

BOOK

REVIEWS

455

M. A. Adelman, The

World

Petroleum Market, Baltimore and

London: The Johns Hopkins University

Press

(1972),438

pp.,

$22.50.

If

one thinks of the thousands of figures

that

have been

collected and discussed

and

of the

great

many sources quoted

it

becomes obvious

that

atremendous amount of work must

have been devoted to this 438-page, densely packed study.

Professor Adelman's book shouldtake

its

place among

the classics of the

literature

of petroleum economics.

Although we maydisagree with his general analysis, we

must

admit thebook provides a mass of

very

helpful statistical

material. Students will find there most of the information

they may need about the international petroleum industry

since World

War

H.

After

abrief summary of the book, wewill make some

comments and criticisms.

According to Adelman, in order to estimate the long

run

supply price of oil, we

must

know its development cost. This

latter

cost isunknownsince new fields'discovery cost is

par

excellence not predictable. There is however an indirect

solution.

At

the margin, development cost inknown fields

equals development cost plusfinding costinnew fields.

If

there is no discovery, the increase of development cost in

known fields reaches

what

Adelman calls the Maximum

Economic Finding Cost.

From

this cost, we may obtain an

estimate of the long

run

supply price (chapter

I).

In

chapter H, "actual numbers

are

set in theory." The

real cost or incremental supply price of

Persian

Gulf crude

oil is about 10 cents

per

barrel.

If

new discoveries were zero,

growing pressure on thereserves in these fields would

put

cost up toabout 20 cents.

For

at

least 15 years this figure of

20 centswillreflectthelong

run

supply price of crude oil

in the world.

Chapter

III

is devoted to the structure of the world oil

industry and chapter

IV

to oil tanker rates. Throughout the