ABSTRACT
This chapter reviews the record of crude oil pricing in the light of capital theory and property rights theory, including the record of oil price behavior resulting from the Iranian supply reductions. The analysis indicates that the Iranian 'crisis' should have no long-run effect on crude oil prices beyond the expected steady upward trend in the real price of crude oil. While shale resources are huge and are concentrated in the United States, Russia, and China, the history of oil shale places it in a group of innovations perpetually on the threshold of production. Under pressure from environmental restrictions, water supply problems, uncertain costs and escalating capital costs for plant construction, costs of producing shale oil have increased in tandem with and somewhat ahead of crude oil prices. To evaluate the pricing power of Organization of Petroleum Exporting Countries (OPEC) need to specify the technical economic definition of a cartel and to identify how a cartel is expected to operate.
