3bed188430dbdc0c065a3e8756849ae4.ppt
- Количество слайдов: 38
OPEC Organization of the Petroleum Exporting Countries Al Gardner, Braden Spear, John Rawlings, Kyoko Kimura, Nathan Faldmo
Development • 1949 – Venezuela approaches Iraq, Iran, Kuwait, and Saudi Arabia • 1960 – Original Meeting • Expansion
Baghdad – 10 -14 Sep 1960
OPEC Countries
History • 1960’s – Formative years • 1970’s – International Prominence • 1980’s – Price and international issues • 1990’s – Mega-mergers
Vienna – 23 Mar 1999
Theory of Cartels The key to a very high price is the inelasticity of demand. The cartel’s inelastic demand depends upon: ü World Ed for the product ü The cartel’s share of the world market üE of supply of competing non-cartel producers
Theory of Cartels Raising prices leads to anticartel trends: üSagging Demand üNew competing supply üDeclining market share üCheating
Reasons for Formation • OPEC’s mission is to… • Coordinate & unify the petroleum policies of Member Countries • Ensure the stabilization of oil prices in order to secure an efficient, economic & regular supply of petroleum to consumers, a steady income to producers & a fair return on capital to those investing in the petroleum industry
The Current Situation The Fight for Market Share
Oil Reserves (billions of barrels)
OPEC Dilemma – Must Raise Oil Prices • Populations now too large to live on local resources – and growing rapidly • If you increase the price of oil by ten times OPEC only doubles profits ie. $3, 700 to $6, 700 • Countries are fighting for Market share with in OPEC • OPEC fighting for World Market Share
Outcome • World prices would be closer to production costs • Profiteering from shortages • Consumers are encouraged to reduce waste and find alternatives • Oil prices will curtail rampant consumption and social effects. • Risk of global warming recedes.
OPEC: International Aspects
Political Function of OPEC • Consists of 11 Member Countries
Political Function of OPEC • Representatives of member countries meet at the OPEC conference • Saudi Arabia has effectively dominated the OPEC, and is considered to be the undisputed leader • Political and economic power of OPEC was displayed most prominently in the 70 s.
The Yom Kippur War • Several western countries supported Israel in the Yom Kippur War • According to CQ Researcher: – “In retaliation, Saudi Arabia led several other Arab countries in a five-month oil embargo that caused nationwide gasoline shortages in the US. As the leading producer in OPEC, S. A. convinced the other members to reduce their exports, causing a quadrupling of world crude oil prices to about $12 a barrel and demonstrating OPEC’s control of the world oil market. ”
Economic Function of OPEC • High prices for oil prompted countries like the US to seek other sources of oil. – For example, the US cut its dependence on OPEC oil: from 82% in 1978 to to 41% in 1985.
• To gain back market share, OPEC had to reenter the market with low prices. • This led to the low prices in the late 80 s and early 90 s. • Over time, OPEC sought to regain control of the market.
Recent OPEC Economic Impact • According to the Columbia Encyclopedia: – “With the cooperation of non-OPEC oil-exporting nations, OPEC was able to raise prices in 1999 by cutting production. As prices rose above $30 a barrel in early 2000, OPEC members agreed to increase production somewhat, cutting back production again a year later in an attempt to maintain prices. A worldwide economic slowdown caused oil prices to fall to near $20 by late 2001, but cutbacks by OPEC and non-OPEC nations, an economic rebound (including very strong economic growth in China), and the U. S. invasion and occupation of Iraq subsequently caused benchmark prices to rise and stay above $40 in mid-2004, with peaks above $50 at times.
Recent Trends • More recently, Oil prices have been driven by speculation on the market and not on actual supply and demand. – Examples: • The threat of war • Developing hurricanes • Political instability in oil-producing countries • Now, when OPEC considers limiting oil production, speculators respond in the markets very quickly.
International Aspects: Summary – Policy of increasing the price on oil • Has worked with some limits – Increase in oil prices decreases consumption (reducing revenues) – Long term price increase can lead to systematic behavior change (conservation)
Special Problems • Worldwide oil sales dominated by U. S. dollars – When dollar falls, purchasing power of OPEC member states falls – After intro of euro, Iraq tried to only be paid in euros, but was unable to sustain it
Special Problems • Negative results of increasing oil prices – Decreases consumption and could cause net decrease in revenue – Extended rise could encourage change to alternative energy or increased conservation
Special Problems • Increasing concern about the environment – Heavy decreases in future oil demands • Too much oil – Enough oil has been found to last about 33 years at current rate – Non-OPEC oil-producing nations often increase production when OPEC cuts it
Special Problems • OPEC oil supplies will soon peak – The rest of the world already has peaked
Special Problems • OPEC oil supplies will soon peak – Despite its claims, it is likely Saudi Arabia is hitting its peak • Recent declines in production • Claims that it’s due to decrease in demand unlikely since no other producers have made similar claims – OPEC countries have overestimated their oil supplies to increase quotas since 1985
The Future of OPEC • Problems • Price Fixing • Competition/No Barriers to Entry
Necessary Reforms • Policy Reforms – Integration – Limits to integration • Policy Strategy – Future – Consequences
Alternatives to OPEC • Caspian oil supply • Russian oil and gas supplies • Alternative energy sources