A strategic simulation of the global oil market, where individual decisions shape prices, profits and collective outcomes.
Black Gold simulates a global oil market in which oil-producing countries and oil-consuming companies interact through a common price mechanism.
Producers decide how much productive capacity to develop, while consumers determine how much oil-related consumption they sustain. No participant controls the market price individually. Instead, the price emerges from the aggregate behaviour of all participants.
This creates a strategic environment in which every decision has two dimensions. It affects the position of the individual actor, but it may also alter the market conditions faced by everybody else.
Producers generally benefit from selling more oil, but aggregate increases in production put downward pressure on the market price. Consumers benefit from access to oil, but aggregate consumption puts upward pressure on that same price.
The simulation therefore reproduces a central problem of international political economy: actors pursue their own interests inside a system whose conditions are themselves transformed by the aggregation of those individual choices.
Your result depends not only on what you do, but also on what everybody else does. Understanding the incentives of other actors, interpreting previous results and anticipating market behaviour are therefore essential parts of the game.
Participants represent individual actors operating in the international oil market.
The simulation includes two different types of actors: oil-producing countries and oil-consuming companies.
Each participant makes decisions independently and seeks to maximize their own accumulated economic result over the course of the simulation.
Players belong to one of two strategic blocs.
Membership in a bloc does not eliminate competition between its members. Actors belonging to the same side of the market share some collective interests while simultaneously competing for individual advantage.
The simulation uses two items representing the two sides of the oil market.
Represents the productive position of oil-producing actors.
Producer decisions contribute to aggregate oil supply. Higher aggregate production tends to reduce the market price.
Represents the oil requirements of consuming companies.
Consumer decisions contribute to aggregate oil demand. Higher aggregate consumption tends to increase the market price.
Black Gold is built around the tension between individual rationality and collective outcomes.
Every player seeks to maximize their own accumulated economic result.
Producers have an incentive to expand their own profitable production. Consumers have an incentive to maintain the level of oil consumption that maximizes their own economic activity.
This creates incentives to behave differently from other members of the same bloc whenever doing so provides an individual advantage.
Members of each bloc also share an interest that may conflict with their individual incentives.
Producers collectively benefit from limiting aggregate supply because lower production tends to sustain a higher oil price.
Consumers collectively benefit from limiting aggregate demand because lower consumption tends to reduce the oil price.
The difficulty is that individual actors may benefit from deviating from these collective strategies.
The central system-level outcome is the stability and sustainability of the oil market itself.
Extreme aggregate strategies may generate large changes in the oil price, creating benefits for some actors and costs for others.
No single participant controls this outcome. Market conditions emerge from the combined decisions of all producers and consumers.
Producers individually have incentives to produce more, while producers collectively benefit from restraining production.
Consumers individually have incentives to consume more, while consumers collectively benefit from restraining consumption.
After every turn, the decisions of all participants are aggregated to determine the market conditions for the following round.
The oil price reacts to the relationship between average production and average consumption. Higher consumption relative to production pushes the price upward, while higher production relative to consumption pushes it downward.
The market starts from a reference oil price. Subsequent prices are adjusted according to the difference between aggregate consumption and aggregate production.
Price = 75 + 0.1 × (Average Consumption − Average Production)
Producer performance depends positively on the oil price and the amount produced, but increasing production also generates increasing production costs.
Producer result = Price × Production − 3 × Production²
Consumer performance depends on their level of consumption and on the price they must pay for oil.
Consumer result = Consumption × (150 − Price)
After each turn, participants can analyse the available results to reconstruct production, consumption, market price and the behaviour of other actors. Rational strategy therefore depends on reading the data rather than simply repeating the same decision every round.
Performance can be evaluated at three different levels. These levels do not necessarily produce the same winner.
Individual success is determined by the economic result accumulated by each player over the course of the simulation.
The most successful participant is therefore the actor that best adapts its strategy to changing market conditions and to the behaviour of the other players.
Producers and consumers can also be evaluated collectively. The performance of each bloc reflects the combined results of its members.
This makes coordination strategically relevant even though every participant continues to pursue an individual result.
The evolution of the oil price reveals the collective consequences of individual decisions.
Participants should therefore consider whether the market converges towards relatively stable conditions or produces cycles, extreme prices and persistent instability.
The final outcome can be used to analyse collective-action problems, market interdependence, strategic coordination, free-riding and the relationship between individual and collective rationality.
Individual success, collective success and market stability do not necessarily coincide.
Results and datasets from previous implementations of Black Gold will be made available here for analysis and comparison.