Globalizing Oil: Firms and Oil Market Governance in France, Japan, and the United States.

AuthorStevens, Paul

Globalizing Oil: Firms and Oil Market Governance in France, Japan, and the United States, by LLEWELYN HUGHES. (Cambridge University Press, Cambridge, UK. 2014), 254 pages, hardcover US$95.00, ISBN 9781107041998

This book is a study of changes in oil market governance in the advanced industrialized countries over the last 30 years based upon case studies of France, Japan and the United States.

Two hypotheses underlie the analysis. The first hypothesis is what Hughes calls "industrial compacts" which shaped the characteristics of the oil companies operating in these environments. These "compacts" were agreements negotiated between the companies and the governments in earlier stages of the industry. They regulated market share and shaped the organizational structure and incentives of the oil companies in each of the markets. Because these "compacts" were bargained outcomes between business and government, inevitably they differed across countries because of the different contexts and histories. The second hypothesis is that these characteristics of the oil companies affected the types of demand they made on the policy makers, which in turn influenced the way in which the governments chose to oversee the oil markets in those countries. Thus, the outcome of the interactions is determined by the nature of these demands and the incentives governments have to acquiesce to the demands. The results set the direction of travel and the governance of the oil sector within the country concerned. For example, in some cases the "compact" produced more diversified and large firms that were less likely to respond to the shift in opportunities. Firms were less likely to demand support from the state, while smaller firms in only one section of the oil industry value chain would continue to demand government support. Thus, Hughes argues that only by identifying the origins of firm heterogeneity and how this affected the ways firms tried to renegotiate the institutional status quo, is it possible to understand the patterns of change in oil market governance.

The book examines these two hypotheses in the context of three case studies, France, Japan and the United States. France and Japan are chosen because they present similar contexts, specifically the lack of a significant domestic resource base for oil. The United States is added to complement the first case studies in two ways. First in terms of the industry structure there are within-case variations with...

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