Chapter 26 - Assignment 3: The World Oil Market

Read David L. Greene's article on "U.S. Oil Dependence: A Growing Problem."

  1. Greene observes that the market power of a cartel is determined by three factors. Explain why each of these factors is important.
  2. Explain why Greene argues that cartel prices will be unstable as a result of differences between short-run and long-run elasticities of demand and supply.
  3. Why does Greene argue that the use of the U.S. petroleum reserve may actually result in a larger increase in oil prices once this reserve is used up?
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