NETBACKS AND THE PRICE COLLAPSE 

by J. E. Hartshorn

(Mr. J. E. Hartshorn is Vice President of the petroleum consulting firm Jensen Associates.)

The stated purpose of Saudi Arabia's adoption of netback pricing last autumn was to restore crude production rapidly to its OPEC quota of 4.35mn b/d, which from a low point in August meant adding some 2mn b/d to its crude exports, roughly trebling them. That national purpose was achieved. An indirect international consequence, after a...