Indicators of Crude-Oil Production Costs: The Gulf versus Non-OPEC Sources by Thomas R. Stauffer

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This paper addresses the importance of crude-oil production costs on giving the Arabian Gulf oil producers a comparative advantage. The Gulf oil p... (More) This paper addresses the importance of crude-oil production costs on giving the Arabian Gulf oil producers a comparative advantage. The Gulf oil producers dominate oil markets because of the sheer size of their known and proven reserves and because they are the lowest-cost producers. The “big four” Gulf producers of Iran, Iraq, Saudi Arabia, and Kuwait are discussed in this article. The author also examines the following questions: what production cost advantage do members of OPEC actually have; how widely do production costs differ among members of OPEC; is there a reason to believe that costs are escalating, especially for the “Big Four; is there a cost-price squeeze outside of the Gulf; and are production costs high enough in non-OPEC exporters that the market share of the Gulf can be expected to continue to increase if prices remain low or uncertain? (This article by Thomas R. Stauffer, “Indicators of Crude-Oil Production Costs: The Gulf versus Non-OPEC Sources,” was published as Occasional Paper 19. Boulder, Colorado: The International Research Center for Energy and Economic Development, 1993. ISBN 0-918714-36-2). (Less)