On the theory of crude oil prices—I. Inroduction of opportunity costs

If recent trends are continued, the price of crude oil will be a strong driving force in changing the practice of energy conversion. This paper discusses the inclusion of an opportunity cost to a state or nation in establishing an appropriate price of crude oil. Succeeding papers will discuss the elasticity of crude oil supply and some implications of offsetting opportunity costs in establishing the price of crude oil. A reasonable approach is established for pricing crude oil, taking into account state or national opportunities, although its application brings into conflict the differing interests of states and nations. The approach relates the opportunity cost to the price elasticity of recoverable volumes of crude oil.