Steven A. Schneider, The Oil Price Revolution (Baltimore: Johns Hopkins University Press, 1983).

Robert Sherrill, The Oil Follies of 1970-1980: How the Petroleum Industry Stole the Show (New York: Anchor Press, 1983).

Steven Schneider offers one of the most comprehensive assessments to date of the changes in the world oil industry in the post-World War II period. Schneider discusses elementary oil economics, but also takes into account the many political, social and ideological elements and contradictions that helped shape the industry. He also shows how, in the course of the last decade, the state has emerged as a new force in oil politics, often rivaling the dominant international petroleum companies.

Schneider provides a realistic description of the power equation on the world oil market as well as an interesting periodization of the developments since the 1960s. He focuses on the increased import dependence of the consuming countries, the disappearance of spare production capacity worldwide, and the growing ability of oil exporters to forgo at least temporarily export revenues in order to advance their longer-term interests. In his account, these factors help explain the shifts in power that led to the “energy crisis.” A rather large part of the book describes the negotiations between OPEC and the oil companies in 1971-1972, when prices began their upward climb. Schneider tries to relate the changing price structure to the sometimes antagonistic, sometimes converging interests of the major “players.”

There are some flaws in his analysis. Schneider contends that the main momentum for change in the world oil system stemmed from a shift in power toward the oil exporting countries. He derides the idea that the companies might have willingly teamed up with the exporters, that they in fact put up a mock fight. In contrast, Sherrill argues that there was a thinly veiled collaboration between the companies and OPEC. His presentation of the numerous advantages of such a set-up for the firms sounds more convincing than Schneider’s interpretation. By the same token, though, Sherrill’s conspiracy charge neglects the dynamics of conflict between the two groups. And neither Schneider nor Sherrill addresses the extent to which the international oil companies have used higher prices and profits to undermine OPEC.

Schneider fails to support his characterization of OPEC as a cartel. Ironically, he himself points out that the rivalry between conservative and radical regimes — assisted by the companies’ upward price bidding — led to their “common” success. Schneider’s discussion of the impact of the 1970s on the majors focuses primarily on the modus operandi worked out between them and the OPEC countries in 1974-1975, and neglects to provide an analysis of the dynamics of the oil market that have worked to break apart this relationship. A more serious flaw is Schneider’s adherence to the fashionable assertion that higher oil prices were the prime cause for the troubles that beset the world economy in the 1970s.

Despite these shortcomings, Schneider’s book is a useful contribution to the political economy of oil. The wealth of detailed information along with an excellent index, makes the book an indispensable reference work.

No book could present such a contrast as Robert Sherrill’s Oil Follies. Sherrill adopts a very colorful, illustrative style, which makes the political economy come alive. Where Schneider restricts himself to the logic of academic reasoning, Sherrill appeals to the reader’s common sense and questions many assumptions and contentions that Schneider takes at face value. Not surprisingly, therefore, the two authors — although both critical of the oil industry — come to sometimes quite opposite conclusions.

Sherrill divides his book chronologically. Consequently, the reader must pick up again and again the threads of the various stories and themes running through the book. Still, Sherrill does a terrific job at recounting and detailing the many “follies,” ranging from the fight over the Alaska oil pipeline, and the controversies over offshore leasing and drilling, to abuses of the Federal Power Commission’s natural gas price setting authority, the incompetence of federal officials and members of Congress, and the orchestration of oil “shortages” by the major companies.

Schneider and Sherrill fundamentally disagree on the question of whether oil interests determine US foreign policy or the other way around. In the early post-war period, US power was absolute and the activities of US oil companies were unambiguously perceived as serving the “national interest.” Oil capital today may be better off in temporarily siding against the US government although, as Sherrill points out, the intimate interlockings between government and industry employees are still producing administration policies amenable to Big Oil’s interests. The Oil Follies concerns primarily events in the United States. Although Sherrill does refer to developments abroad, the situation in the Middle East and elsewhere remains in the background. By concentrating on the US domestic scene, Sherrill makes clear that it is within the US where one has to look for the root causes of the “energy crisis” usually blamed on the OPEC states.

How to cite this article:

Michael Renner "Books on Oil Prices," Middle East Report 128 (November/ December 1984).

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