The Allocation of “Oil Deficits”

Robert Solomon

RS

Robert Solomon

Discussants: Marina V. N. Whitman and

MVNW

Marina V. N. Whitman

Walter S. Salant

WSS

Walter S. Salant

THE MEMBERS of the Organization of Petroleum Exporting Countries have developed a huge surplus on goods and services with the rest of the world as a result of the quadrupling in oil prices since late 1973 and their inability promptly to spend on imports all the subsequent enlarged export receipts. This surplus, estimated at about $60 billion in 1974, can be reduced only by the following means, alone or in some combination: (1) a reduction in oil prices; (2) a reduction in demand for OPEC oil by importing countries; (3) an increase in imports of goods and services by members of OPEC.