A paper written two years ago gave a general analysis of the current world oil market, indicating why the price had nothing to do
with real scarcity, but was set by a monopoly both vulnerable and very strong. The purpose is now t analyze the market more closely, with a view to making some predictions about future prices.
Non-competitive markets are notoriously hard to analyze, because we have no precise theory of small-group actions. Furthermore, the current cartel2 is very recent, and its great successes since the 1970 Libyan negotiations have been and still are a learning process. But we can at least identify the principal factors, and eliminate irrelevant or wrong
hypotheses
