PEAK OIL

demanded resource and (2) by successful attempts to vertically integrate value-added chains
of oil production and processing.
(1) Further shortage following peak oil
Being aware of exceeding peak oil and in view of countries pursuing their own lasting
advantages, there might be a deliberate restriction in supplies (“political peaking”), for
example, to preserve undeveloped oil resources for the nation’s generations to come. 55 The
more obvious the actual scarcity of oil, the more expensive oil would become and thus the
greater the profits of producer countries. The calculus of “political peaking” would become all
the more understandable. Political peaking would further aggravate peak oil-induced supply
shortage and related price increases.
Similar effects would be caused by a trend which can be observed mainly in less
industrialised producer countries. Oil recovered and refined at home is offered on the
domestic market at a price below the world market price, for example to improve the
competitiveness of a rather inefficient national industry or to share the country's riches with
the population. It is observable that this price distortion leads to an increase in domestic
consumption which reduces export quantities and supports a generally inefficient use of oil.
Such dynamics could lead to exports increasing more slowly than production, or, in the event
of a peak, the exported amount of oil decreasing even more rapidly than the produced
amount. After peak oil, this could lead to an additional acceleration of the decrease in
globally available production quantities.
(2) Renewed vertical integration of value-added chains
A predictably decreasing number of established oil exporters and the growing importance of
big, financially strong oil companies in developing and threshold countries ("New Seven
Sisters" 56 ) in view of peak oil could lead to promoting the creation of new monopolies.
In a sense, this would undo the liberalisation of oil markets following the crises of the 1970s.
After the oil crises, many producer countries expropriated Western oil companies, which had
virtually controlled their national oil resources. However, the initial result was not a growing
market power of the individual producer countries, but a strengthening of market
mechanisms and the establishment of a functioning global oil market for the first time. In
particular the break-up of the vertical integration of the oil industry, that is, the control over
the whole value-added chain from oil extraction to the operation of filling stations by a single
company, led to a noticeable relaxation on the oil market, which, under the circumstances at
that time, was in the interest of both producers and consumers. With the upstream and/or
downstream expansion57 of oil companies and depending on governmental influence, the
danger of a political instrumentalisation of dependences would grow.
55 Such a behaviour can be observed already today. In April 2008, King Abdullah of Saudi Arabia ordered not to develop sources newly discovered at the time.
56 These are CNPC/ Petrochina, Gazprom, Petrobras, Petronas, Petróleos de Venezuela, National Oil Company of Iran and Saudi Aramco.
57 "Upstream" refers to activities in exploration and production, “downstream" refers to activities with a closer relationship to the consumer. Markets disappear due to the
integration of both components in big companies. For example, extracted crude oil is not sold to the highest bidder, but transferred to other divisions of the company. In
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