Consider the price elasticity of crude oil demand Economist John C B Cooper estimated short- and long-run price elasticities of demand for crude oil for 23 industrialized nations for the period 1971–2000 Professor Cooper found that for virtually every country, the price elasticities were negative, and the long-run price elasticities were generally much greater (in absolute value) than were the short-run price elasticities His results are reported in Table 5.1 "Short- and Long-Run Price Elasticities of the Demand for Crude Oil in 23 Countries" As you can see, the research was reported in a journal published by OPEC (Organization of Petroleum Exporting Countries), an organization whose members have profited greatly from the inelasticity of demand for their product By restricting supply, OPEC, which produces about 45% of the world’s crude oil, is able to put upward pressure on the price of crude That increases OPEC’s (and all other oil producers’) total revenues and reduces total costs Table 5.1 Short- and Long-Run Price Elasticities of the Demand for Crude Oil in 23 Countries Country Short-Run Price Elasticity of Demand Long-Run Price Elasticity of Demand Australia −0.034 −0.068 Austria −0.059 −0.092 Canada −0.041 −0.352 China 0.001 0.005 Denmark −0.026 −0.191 Finland −0.016 −0.033 France −0.069 −0.568 Germany −0.024 −0.279 Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 251