The Organization of Petroleum Exporting Countries, otherwise known as OPEC is a permanent, intergovernmental organization, created at the Baghdad conference on September 10-14, 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. The five founding members were later joined by eight other members. These countries included Qatar in 1961, Indonesia in 1962, Socialist Peoples Libyan Arab Jamahiriya in 1962, United Arab Emirates in 1967, Algeria in 1969, Nigeria in 1971, Ecuador in 1973 up till 1992 and Gabon in 1975 up till 1994. OPEC had its headquarters in Geneva, Switzerland, in the first five years of its existence. OPEC then moved to Vienna, Austria, on September 1, 1965. OPEC accounts for 40% of global production and 75% of known reserves. .
OPEC is an example of an Oligopoly with regards to its market structure. This means there are few sellers in the market, the product is either homogeneous, or differentiated and there is difficult market entry. With regards to OPEC, this means that there are not many countries who sell oil, all the oil is identical meaning that it is a homogeneous product. For example, the oil sold by Saudi Arabia is identical to the oil from Iran. Finally, formidable barriers to entry protect firms from new entrants. These barriers include exclusive financial requirements, control over an essential resource, patent rights, and other legal barriers. Although the most significant barrier to entry in an oligopoly is economies of scale. Oligopolies are very similar to monopolies because they are present in real-world industries. The one main thing that sets the two apart are the fact that in a monopoly you have just one firm operating.
An oligopoly formally organizes into a cartel and then acts like a shared monopoly. This is why the two structures are similar. OPEC is a cartel and cartels are illegal in this U.S. OPEC restricts output of its members to maintain a high price of oil.
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. ...
OPEC Summary OPEC, formally known as the Organization of Petroleum Exporting Countries, strikes attention to many Americans and economists. OPEC controls our nation's oil supply. ... 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. ... Analysis OPEC is the basic story of supply and demand. OPEC controls our nations oil supply; it directly effects demand and price. ...
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. ...
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. ...