Professor Raymond Vernon's special mixture of encouragement and criticism has been invaluable. Research support was provided by Seung Jae Chyun and Jim Murchie. The Program on U.S.-Japan Relations, Center for International Affairs, Harvard University, provided financial assistance.

¹ Exxon, Mobil, Socal, Texaco, Gulf, British Petroleum, and Royal Dutch Shell.

² “Producing Nations Expand Direct Sales to 42% of Oil Trade,” Petroleum Intelligence Weekly, 25 February 1980, pp. 3–4.Google Scholar

³ Federal Trade Commission, Report to the Subcommittee on Monopoly, Select Committee on Small Business, U.S., Senate, The International Petroleum Cartel (Washington: GPO, 1952), pp. 12–25Google Scholar; also Jacoby, Neil H., Multinational Oil (New York: Macmillan, 1974). p. 194.Google Scholar

⁴ Penrose, Edith, The Large International Firm in Developing Countries: The International Petroleum Industry (London: Allen & Unwin, 1968), p. 109.Google Scholar

⁵ For a discussion of these entry barriers, see Vernon, Raymond, Sovereignty at Bay (New York: Basic Books, 1971), pp. 27–37.Google Scholar

⁶ For a discussion of the U.S. government role, see Turner, Louis, Oil Companies in the International System (London: Allen & Unwin for the Royal Institute of International Affairs, 1978), chaps. 2 and 3.Google Scholar

⁷ See U.S., Senate, The International Petroleum Cartel, pp. 56–61 and 199–211.Google Scholar

⁸ See Vernon, Raymond, “State-owned Enterprises in Latin American Exports,” in Baer, Werner and Gillis, Malcolm, eds., Trade Prospects Among the Americas: Latin American Exports Expansion and the New Protectionism (Urbana: University of Illinois Press and NBER, forthcoming 1981)Google Scholar; see also Adelman, M. A., The World Petroleum Market (Baltimore: Johns Hopkins Press, 1972), pp. 87–89.Google Scholar

⁹ For a detailed discussion of the gains from vertical integration, see Teece, David J., Vertical Integration and Vertical Divestiture in the US Oil Industry (Stanford, Cal.: Stanford University, Institute for Energy Studies. 1976)Google Scholar. See also Vernon, , Sovereignty at Bay, p. 29Google Scholar; and Stobaugh, Robert and Yergin, Daniel. eds., Energy Future (New York: Ballantine, 1979), p. 51.Google Scholar

¹⁰ See Noreng, Oystein, “State-owned Oil Companies: Western Europe,” in Vernon, Raymond and Aharoni, Yair, eds., State-owned Enterprises in the Western Economies (London: Croom-Helm, 1981), pp. 133–43.Google Scholar

¹¹ See Vernon, Raymond, “An Interpretation,” in Vernon, Raymond, ed., The Oil Crisis (New York: Norton, 1976), pp. 1–14.Google Scholar

¹² Jacoby, , Multinational Oil, chap. 7.Google Scholar

¹³ See Lenczowski, George, Oil and State in the Middle East (Ithaca: Cornell University Press, 1960), pp. 82–86.Google Scholar

¹⁴ See Weisberg, Richard C., The Politics of Crude Oil Pricing in the Middle East, 1970–1975 (Berkeley, Cal.: Institute of International Studies, 1977), pp. 37–51.Google Scholar

¹⁵ Rustow, D. A. and Mugno, John F., OPEC: Success and Prospects (New York: New York University Press, 1976)Google Scholar, Appendix A, Table 2. See also Vernon, , “An Interpretation.”Google Scholar

¹⁶ See Adelman, , The World Petroleum Market, chap. 6 and pp. 196–204.Google Scholar

¹⁷ For changes in the World Bank's lending policies to state-owned enterprises, see Mason, Edward S. and Asher, Robert, The World Bank Since Bretton Woods (Washington, D.C.: Brookings, 1973), PP. 150–51 and 371–74Google Scholar; for trends in private lending, see Eaton, Jonathan and Gersovitz, Mark, “Poor Country Borrowing in Private Financial Markets and the Negotiation Issue,” Princeton Studies in International Finance no. 47 (Princeton, N.J., June 1981).Google Scholar

¹⁸ Oil and Gas Journal, various issues.

¹⁹ See Ghadar, Fariborz, The Evolution of OPEC Strategy (Lexington, Mass.: Lexington Books, 1977), p. 69Google Scholar; Tugwell, Franklin, The Politics of Oil in Venezuela (Stanford: Stanford University Press, 1975), p. 56.Google Scholar

²⁰ Ghadar, , Evolution of OPEC Strategy, pp. 108, 125Google Scholar; Shwadran, Benjamin, The Middle East, Oil and the Great Powers (New York: John Wiley, 1973), p. 418.Google Scholar

²¹ See Ghadar, , Evolution of OPEC Strategy, Appendix 1, pp. 149–87Google Scholar; Adeniji, Kola, “State Participation in the Nigerian Petroleum Industry,” Journal of World Trade Law 11, 2 (03–04 1977): 156–79.Google Scholar

²² Ghadar, , Evolution of OPEC Strategy, Appendix 1Google Scholar; Federal Energy Administration, The Relationship of Oil Companies and Foreign Governments (Washington: GPO, 1975).Google Scholar

²³ See Penrose, , The Large International Firm, p. 114.Google Scholar

²⁴ Adelman, , The World Petroleum Market, p. 96Google Scholar; see also Yoshino, Michael, Japan's Multinational Enterprises (Cambridge: Harvard University Press, 1976), p. 37.Google Scholar

²⁵ See Mendershausen, Horst, Coping with the Oil Crisis (Baltimore: Johns Hopkins Press, 1976), pp. 23–32Google Scholar; see also Madelin, Henri, Oil and Politics (Lexington, Mass.: Lexington Books, 1975), chap. 4.Google Scholar

²⁶ See Kidron, Michael, Foreign Investments in India (London: Oxford University Press, 1965), pp. 166–75Google Scholar; see also Evans, Peter, Dependent Development (Princeton: Princeton University Press, 1979), pp. 90–91, 228.Google Scholar

²⁷ Brtish Petroleum, Statistical Review of the World Oil Indurtry, 1979, p. 25Google Scholar and Exxon, Mobil, Gulf, Texaco, and British Petroleum Annual Reports.

²⁸ American Petroleum Institute, Basic Petroleum Data Book (Washington, D.C., 1980)Google Scholar, Section 9. Table 3.

²⁹ For evidence that some OPEC countries have long recognized this danger, see Yamani, Sheikh A. M., “Participation Versus Nationalization: A Better Way to Survive,” in Z., Mikdashi, ed., Continuity and Change in the World Oil Industry (Beirut: Middle East Research and Publishing Center, 1970).Google Scholar

³⁰ ”Producing Nations Expand Direct Sales to 42% of Oil Trade,” Petroleum Intelligence Weekly, 25 February 1980, pp. 3–4Google Scholar; Parra, Alirio A., “The New Role of NOCs,” Middle East Economic Survey, supplement, 8 09 1980, p. 5.Google Scholar

³¹ “Iraq-IPC Agreement,” Oil Industry Developments, March–April 1973 (London: Petroleum Economics Ltd.), pp. 107–110.Google Scholar

³² Ghadar, , Evolution of OPEC Strategy. p. 81Google Scholar; “Iran Supply Ban Hits at Least Eleven US Oil Companies,” Petroleum Intelligence Weekly, 19 November 1979, p. 4.Google Scholar

³³ See Neff, Thomas, “The Changing World Oil Market,” in Deese, David and Nye, Joseph, eds., Energy and Security (Cambridge, Mass.: Ballinger, 1981), pp. 23–46.Google Scholar

³⁴ “More European Nations Buying Oil in State Deals,” Petroleum Intelligence Weekly, 15 Ocotber 1979, P. 3Google Scholar; “Kenya,” Platts Oilgram News, 5 August 1980, P. 3.Google Scholar

³⁵ ”Denmark—State Oil Company,” Oil Industry Developments, January–February 1980, p. 48Google Scholar; Neff, , “Changing World Oil Market,” pp. 25–28.Google Scholar

³⁶ ”Japan Nearly Covers Its Iranian Crude Supply Shortfall,” Petroleum Intelligence Weekly, 19 May 1980, p. 3Google Scholar; “Producing Nations Expand Direct Sales to 42% of Oil Trade,” Petroleum Intelligence Weekly, 25 February 1980, pp. 3–4.Google Scholar

³⁷ “Majors Selling Out More Refining Stakes in Europe,” Petroleum Intelligence Weekly, 28 January 1980, P. 4Google Scholar; “Taiwan Satisfies Crude Needs, Korea Still Searching,” Petroleum Intelligence Weekly, 11 February 1980, P. 6Google Scholar; “Sweden,” Petroleum Intelligence Weekly, 2 June 1980, p. 12Google Scholar; “Gulf Oil Pares down Refining Stakes to Match Crude Supply,” Petroleum Intelligence Weekly, 30 June 1980, p. 4Google Scholar. For earlier evidence of divestment by the majors, see Turner, , Oil Companies in the International System, p. 209.Google Scholar

³⁸ “Major Oil Firms Still Vulnerable Despite Mini-glut,” Petroleum Intelligence Weekly, 14 April 1980, Pp. 1–2.Google Scholar

³⁹ For details of these deals, see Oil Industry Developments (London: Petroleum Economics Ltd., bimonthly).Google Scholar

⁴⁰ For a similar argument, see Adelman, , The World Petroleum Market, pp. 257–58.Google Scholar

⁴¹ For some examples see “Royal Payoffs: Saudi Princes Pressure Oil Firms for Secret Payments,” Wall Street Journal, 1 May 1981, p. 1Google Scholar; “Big Saudi Oil Deal with Italy Collapses after Fee Plan is Bared,” Wall Street Journal, 4 May 1981, p. 1.Google Scholar

⁴² For an example from the iron ore industry, see Vernon, Raymond and Levy, Brian, “State-owned Enterprises in the World Economy: The Case of Iron Ore,” in Jones, Leroy P., ed., Public Enterprise in Less Developed Countries: Multidisciplinary Perspectives (Cambridge: Cambridge University Press, 1982)Google Scholar; for a more general treatment, see Newman, H. H., “Strategic Groups and the Structure-Performance Relationship,” Review of Economics and Statistics 60 (08 1978): 241–61.Google Scholar

⁴³ See “Will the Oil Glut Spark an OPEC Price War?” World Business Weekly, 20 April 1981, pp. 6–7.Google Scholar

⁴⁴ See “Welcome Back the Glut,” Economist, 7 February 1981, p. 81.Google Scholar

⁴⁵ See Moran, Theodore H., “Modeling OPEC Behavior: Economic and Political Alternatives,” International Organization 35, 2 (Spring 1981): 241–72.CrossRefGoogle Scholar

⁴⁶ For an example of the ideology underlying downstream investment by national oil companies, see Alnasrawi, Abbas, “Opec National Oil Companies and the Restructuring of the International Oil Industry,” OPEC Review 2, 4 (09 1978): 48–63.CrossRefGoogle Scholar

⁴⁷ See Oil and Gas Journal, 29 December 1975, 25 December 1978, and 19 May 1980.

⁴⁸ “What's New Around the World,” Petroleum Intelligence Weekly, 10 March 1980, p. 10Google Scholar; “Non-OPEC Mexico Broadens Its Base in European Refining,” Petroleum Intelligenc Weekly, 7 July 1980, pp. 4–5.Google Scholar

⁴⁹ See Stobaugh, R. B., “The Oil Companies in the Crisis,” in Vernon, , The Oil Crisis, pp. 179–202Google Scholar. See also Commission of the European Communities, Report on the Behavior of the Oil Companies in the Comm unity from October 1973 to March 1974 (Brussels: EC, 1975), p. 145.Google Scholar

⁵⁰ The Japanese intent to diversify was announced in the October 1978 report of the Overall Energy Council; see “Long-term Oil Strategy Succeeding for Japan,” Petroleum Economist, September 1979, pp. 369–75Google Scholar. See also “Japan Nearly Covers Its Iranian Crude Supply Shortfall,” Petroleum Intelligence Weekly, 19 May 1980, p. 3.Google Scholar

⁵¹ See Nye, Joseph S., “Energy Nightmares,” Foreign Policy, no. 40 (Fall 1980), p. 153.Google Scholar

⁵² For examples from other industries of the fragility of linkages short of vertical integration, see Vernon, and Levy, , “State-owned Enterprises in the World Economy.”Google Scholar See also Joseph, D'Cruz, “Quasi Integration in Raw Material Markets: The Overseas Procurement of Coking Coal by the Japanese Steel Industry,” Ph.D. diss., Harvard Business School, 1979.Google Scholar

⁵³ Parra makes a similar point in “The New Role of NOCs.”

⁵⁴ “Oil Exchange for Steel Finance,” Financial Times, 21 July 1980Google Scholar; “Mitsubishi's Longpending Saudi Project Starts Taking Shape,” Japan Economic Review, 15 May 1980.Google Scholar

⁵⁵ ”Iraq Plans to Sell More Oil to France,” New York Times, 12 July 1979Google Scholar; “Caracas to Double Italy Oil Sales,” Financial Times, 14 December 1979.Google Scholar

⁵⁶ For one expert's depiction—or, perhaps, as he suggested, “unrealistic utopian fantasy”—of what such linkages might be, see Levy, Walter J., “Oil and the Decline of the West,” Foreign Affairs, Summer 1980, pp. 1014–1015.Google Scholar