ABSTRACT
This chapter analyses certain aspects of the organization of production and the structure of the market in the international petroleum industry. It describes the way in which the problems arising have been dealt with by the major firms in the industry. The chapter also deals with the major crude-oil producing centers of the Middle East from which about 56% of Europe’s oil imports come. Vertical integration partially destroys the independent market nexus between crude-oil producers on the one hand and refiners on the other, for the cost to an integrated company of its own crude oil is not a uniform market price but the cost of producing the crude. Since there are wide variations in the costs of production of crude oil from different sources, it follows that the raw-material component in the cost of oil products will be different for different integrated companies depending on the distribution of their ownership rights in crude oil.
