Book Reviews

AuthorJean-Marie Chevalier
DOI10.1177/0003603X7401900224
Published date01 June 1974
Date01 June 1974
Subject MatterBook Reviews
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 should take
its
place among
the classics of the
literature
of petroleum economics.
Although we may disagree with his general analysis, we
must
admit the book 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, we will 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 is unknown since new fields' discovery cost is
par
excellence not predictable. There is however an indirect
solution.
At
the margin, development cost in known fields
equals development cost plus finding cost in new 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 the reserves in these fields would
put
cost up to about 20 cents.
For
at
least 15 years this figure of
20 cents will reflect the long
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

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