Market Control and Politics.The International Cartel of Oil Corporations 1960-1980

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Historical and economic research often assumes that the liberalization of trade and neo-liberal policies during the second half of the 20th century led to a decreased significance of cartels as a form of economic organization. However, the development of international commodity markets shows that this thesis is disputable. The project deals with the world oil market between 1960 and 1980 and makes the international oil companies the focus of the analysis. During this period, seven large corporations controlled the world oil market and hence one of the most important markets of the postwar period. Although oil companies did not formally establish cartel agreements immediately following World War II, they did continue to make informal arrangements concerning the prices and production of oil. By 1960 their strong market regime was repeatedly challenged by the rise of new market stakeholders, largely due to the establishment of independent cartel enterprises but also as a result of an increased political relevance of the oil market. With the formation of the Organization of Oil Exporting Countries (OPEC) a second, state-run cartel, which claimed the rights of usage, production and profit, the landscape of the oil market was perpetually altered. The project analyzes how oil companies positioned themselves within shifting market circumstances between 1960 and 1980 and which strategies they pursued to maintain their dominant position. The central argument of the project contends that the changes and the new competition on the oil market spurred reinforced cooperation between large international oil companies. Even the alleged tipping point of the 1973/74 oil price crisis did not change this constellation.Building on a systematic and archival-based analysis of the involved corporations, the project explains the emergence and transformation of international commodity markets after the Second World War. Furthermore, it makes a contribution to the empirical analysis of international cartels.