ABSTRACT
Policymakers and media give far more attention to the impact of restructuring in decline or stagnation than they do under conditions of growth. The consequences of a changing oil industry for the Gulf Coast economy are simply a local playing-out of events that precipitated elsewhere. Advocates of economic efficiency see this as a restructuring process that will enhance the profitability of an American oil industry faced with a world oil glut and intense international competition. Similarly, domestic refining is undergoing structural change precipitated largely by the changing market for refined products. While the oil industry may be unique in merger size, further acquisition can be justified because concentration ratios were relatively small compared to motor vehicles, steel, aircraft, photography and electronic computing equipment. While short-term profitability is affected most directly by short-term fluctuations in the benchmark price, decisions concerning investment of capital in drilling and exploration are influenced more strongly by the anticipated long-term trend in prices.
