Scenarios, 1971-1981

Four Representative Scenarios (November 1971)

These scenarios are based on two themes, “producer government take” and “world economic development.” The first two scenarios relate to the former theme and the second two scenarios to the latter.

Low Take Scenario

Producers follow the Tehran Agreement to 1976, then increase ‘take’ to $2.35/bbl (in 1970 dollars). Further gradual increases raise ‘take’ to $3.251bbl by 1985.

High Take Scenario

Seller's market allows producers to follow “highest possible take/lowest possible production” strategy. Government ‘take’ rises to $4.75/bbl in 1979, which holds through 1985.

Low-Growth Seventies

Economic problems in major economies continue, and inflation is difficult to control. Difficulties experienced with international monetary system, with moves towards protectionism.

High to Medium Growth

Major economies cooperate on world monetary and multi-lateral trading issues. U.S. recovers from recession, which leads to the creation of conditions for relatively high economic growth.

Scenarios for the 1973 Planning Cycle (January 1973)

The A series is based on “impending energy scarcity.”

Private Enterprise Solution

Consumer governments and oil industry react positively to the impact of high oil prices with private enterprise actively encouraged, especially in the U.S.

Dirigiste Solution

Consumer governments intervene, supported by public opinion. Subsidies are given to the energy industry, and constraints imposed on energy use and conservation are encouraged. Through the 1970s, economic activity is affected by inflation and balance of payments problems.

Crisis Scenario

Late response to impending energy gap causes oil prices to spiral in response to market forces. Nationalization is widespread with tight government control on the oil industry.

The B Series was based on the theme of “sufficient energy supplies and low prices.”

Low Demand Scenario

Early manifestation of changing social values and nationalistic tendencies hamper world trade with ecological/environmental considerations becoming important. These circumstances combine to restrain growth.

Successful Muddling Through Scenario

The U.S. returns to high economic growth, but W. Europe suffers from severe competition from Japan. A satisfactory solution is found to Middle East problems. The U.S., Western Europe, and Japan coordinate their energy policies, which provides new investment opportunities for private enterprise.