Variation in OPEC and Non-OPEC Crude Oil Production: 1973 to 2010

Abstract

The impact of the OPEC cartel on crude oil prices is the subject of considerable discussion in the literature but there is little analysis of what crude oil producing nations actually do. Regime shift tests, using U. S. Energy Information Administration monthly crude oil production data from 1973 to 2010, show evidence of structural change in the time series nature of world production. In particular, there is evidence of increased volatility in monthly production over the periods from 1973 to 1990 and from 1997 to 2003. OPEC production volatility differs considerably from non-OPEC production volatility over the period of this study. Indeed, cluster analysis of individual country production identifies variation in clusters over the study period. While there are a number of country production clusters in the period from 1973 to 1990, which appears to drive results for full period analysis as well, the post 1990 period sees a movement toward one large production cluster including both OPEC and non-OPEC nations. It appears the marked dichotomy between OPEC and non-OPEC producers is no longer relevant to modelling world oil and gas production.

Keywords: crude oil production, OPEC, non-OPEC, cluster analysis

JEL Classification: G14