Over the decade from 1973-83, the world stood witness to a four-fold rise in the price of oil. No other basic commodity is known to have changed price so markedly in such a short time, and the effects of the change have reverberated through every sector of the international community. During the mid-to-later 1980's, oil prices plummeted over fifty percent due to OPEC's internal disruption and heightened production in non-OPEC countries. A rising OPEC market share, again in the 1990's, threatens the world of a 1970's revisit. The FSU's reverse level poses a threat to OPEC's position. As the FSU's market economies evolve after the Soviet administration disintegrates, market will develop for domestic and foreign companies to drill for oil in the region. The FSU has the potential to become a world exporter of oil.
This thesis applies a Nash-Cournot model, in a dynamic form, to assess the present day significance of this hypothesis. Our model does not find any evidence to refute such a proposition. However, based on available FSU reserve data, is appears unclear whether the FSU has the capacity to reduce world oil prices to the levels existent in the mid 1980's. Nevertheless, some predicted impact is still evident and will result in positive results for Australia as a net importer of crude oil. The full benefits remain to be realised.