OPEC, formally known as the Organization of Petroleum Exporting Countries, strikes attention to many Americans and economists. OPEC controls our nation's oil supply. Recently, because of their inability to supply an adequate amount of oil to our country the price of crude oil has risen to as much, if not more, than thirty dollars a barrel. An article published by the Wall Street Journal on November 14, 2000, states that OPEC does not plan to increase supply because they are comfortable with the price increase.
OPEC Secretary General Rilwanu Lukman states that OPEC does not eel as though crude oil at thirty dollars a barrel is causing problems in the international economy. At first, OPEC stated that it would only want to see oil sold at twenty-eight dollars a barrel, but now their position has changed. This change came despite many warnings from analysts around the world. These analysts felt that such high prices for oil could be dangerous to the economy in the future. (See analysis below).
The article also brings up the idea that prices will fall as the annual season drop-off in oil demand kicks in. As winter turns into spring the demand for oil will drop, forcing prices to spiral downward. To ward off the drop in prices, the article states that OPEC will trim production costs. Further on in the article, OPEC counters by blaming others for the cost hike. This doesn't make sense, because they are clearly at fault. They are taking advantage of the fact, that we need oil, and we will pay high costs for that oil.
Analysis.
OPEC is the basic story of supply and demand. OPEC controls our nations oil supply; it directly effects demand and price. Right now, the supply curve is shifted to the left indicating a minimal supply. This decreased supply is the whole reason for out high prices today.
The article states that thirty-dollar oil is not creating a hardship. This is because oil prices are inelastic-demand is remaining constant despite the high prices.
OPEC 1. ... According to the articles OPEC will likely not gain more influence in the future. ... Although the articles did mention that OPEC does have its grip around the oil consuming countries such as U.S., Britain, and the like. ... The OPEC countries do not exactly like the U.S. ... Siberian's oil is not comparable to the amount of oil the OPEC countries possess. ...
Does OPEC really have the power to effect the economy so greatly with their decisions? ... OPEC was created at the Baghdad Conference in Iraq in September 1960. ... Members of OPEC meet on a regular basis to set production levels in hope of maintaining prices. ... The members that make up OPEC would suffer. ... OPEC also speaks to other oil producers to encourage them to avoid over supplying the market. ...
Although OPEC was large in numbers, it was not effective. ... OPEC soon realized that this would mean an oil surplus. ... Many international economists felt that OPEC would not last. ... At one point OPEC controlled 90% of the world's oil industry. ... OPEC again slowed down production. ...
OPEC then moved to Vienna, Austria, on September 1, 1965. OPEC accounts for 40% of global production and 75% of known reserves. ... OPEC is a cartel and cartels are illegal in this U.S. ... The decline in oil prices in the late 1990s rattled OPEC members, and OPEC decided a cut was necessary to prevent a significant fall or rise in the price of oil. ... At the end of 2001, OPEC entered into a protracted negotiation with key non-OPEC producers aimed at reducing oil exports enough to increase the world market price. ...
In 1999 alone, the U.S. imported 10551000 barrels of oil from both OPEC and non-OPEC countries (AER, 1999). ... Importing such a precious resource leaves the U.S. at the mercy of oil exporting countries, such as those in OPEC. ...
The reason for the split in OPEC in the mid 1970s was due in part from the fact that the economies of OPEC countries were now more than ever before in their history, integrated in the world community. ... Even though this was and still is the prevailing view, with the oil prices subject to such fluctuation after the embargo, certain economists have offered an alternative thesis, - "Alan Gelb has pointed out, its is even "possible to make the case that OPEC oil exporters ended the period worse off than they would have been... with constant real oil prices". ... However, it came sooner to som...
Throughout the last fifty years of oil and gasoline consumption throughout westernized nations including the United States, the elasticity of demand for these fuels has been more dictated by the pricing decisions of OPEC over pure market forces. ... There is in fact no clear definition of elasticity of demand for fuels, as the effects of oil futures trading, OPEC pricing models and decisions, the inclusionary versus exclusionary strategies of OPEC with regard to their lesser capitalized members, and the continuing political turmoil of the Middle East only serve to exacerbate the...
Before the year 1980, the demand for oil worldwide has increased drastically, and so did the production of the oil by non-OPEC nations (Department of Energy, 2002). As a defense mechanism, OPEC reduced its output drastically to keep its official price. ... Kuwait has reserves of 108 billion barrels, or the equivalent of 8% of worlds total amount of oil (OPEC, 2014). ... Outside OPEC, there was another major oil producer, the Soviet Union. ... Most of those countries are still oil producers and big external influence for OPEC (IEA, 2015). ...
It also depends on OPEC to provide an umbrella of protection in order to keep oil production and exports up. OPEC, created in 1960 at the Baghdad Conference, is a permanent, intergovernmental organization. ... When looking at the impact that OPEC has on Iraq, it is clear that this organization is very helpful on the economy. Although OPEC denies it, what it has created is a monopoly in the world oil market. Few countries or organizations can compete with the volume, efficiency and price and which OPEC member countries produce oil. ...