The Emperor Has No Clothes: The Limits of OPEC in the Global Oil Market (original) (raw)
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Energy Economics, 2015
We develop a conceptual model that captures OPEC pricing behavior, and apply it to explain the large gap observed between domestic fuel prices in OPEC countries and prices in the rest of the world. We model OPEC as a cartel of nations, not firms, and assume politician use two instruments: production quotas and domestic fuel consumption subsidies. The cartelof-nations model suggests that introduction of alternatives to petroleum products may lead OPEC to reduce exports and increase domestic fuel consumption. The empirical analysis suggests that when OPEC sets production quotas, it places similar weights on consumers and producers surplus. But when OPEC countries set domestic fuel subsidies, on average 6% more weight is given to consumer surplus with some of the OPEC countries pursuing very aggressive domestic cheap fuel policies.
The Genuine role of Organisation of Petroleum Exporting Countries in the Global Oil Market
2019
The Organisation of Petroleum Exporting Countries (OPEC) is a permanent intergovernmental organisation. Its mission is, according to its statute, to coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry. Many authors point out that OPEC has lost his position in the oil market, others have the opposite opinion. This paper will explore the genuine role of the organisation in the global oil market by analysing its production quotas and its real oil production and their impact on the oil prices. The main conclusion of this paper is that OPEC has still a power in the global oil market but less than other time before.
INTRODUCTION: The Rise and Fall of OPEC in the Twentieth Century (OUP, 2019)
2019
The Organization of the Petroleum Exporting Countries (OPEC) is one of the most recognizable acronyms among international organizations. It is mainly associated with the 'oil shock' of 1973 when prices of petroleum quadrupled and industrialized countries and consumers were forced to face the limits of their development model. This is the first history of OPEC and of its members written by a professional historian. It carries the reader from the formation of the first petrostate in the world, Venezuela in the late 1920s, to the global ascent of petrostates and OPEC during the 1970s, to their crisis in the late-1980s and early- 1990s. Formed in 1960, OPEC was the first international organization of the Global South. It was perceived as acting as the economic 'spearhead' of the Global South and acquired a role that went far beyond the realm of oil politics. Petrostates such as Venezuela, Nigeria, Algeria, Saudi Arabia, Iraq, and Iran were (and continue to be) key regional actors, and their enduring cooperation, defying wide political and cultural differences and even wars, speaks to the centrality of natural resources in the history of the twentieth century, and to the underlying conflict between producers and consumers of these natural resources.
International Political Economy: A Field Born of the OPEC Crisis Returns to Its Energy Roots
Energy Research & Social Science, 2014
International Political Economy is a multidisciplinary field which officially falls under the political science discipline. IPE of energy is a nascent field to which scholars have only recently started to identify. IPE scholarship generally focuses on issues where politics and economics intersect, and looks at a variety of actors, including individuals, states, and international organizations. Since IPE’s official founding in the 1970’s, following the energy crises and the end of the gold standard, most energy research has focused on issues related to oil, such as OPEC, the “resource curse,” oil companies, and domestic policies related to oil. We suggest a number of promising areas for research: on the theoretical side, making politics explicit and incorporating international organizations, regionalism, community interests, international structure, ideas and identity and environmental studies into IPE scholarship. We also suggest three issue areas–renewable and other energy sources, electricity, and sovereign wealth funds.
Crude oil was possibly the most crucial natural resource for the development of the industrial society in the 20th century and allowed for the global expansion of consumerism. It significantly contributed to the rise of a new era that is now starting been called the Anthropocene. This conference will explore the cooperation among the world largest oil exporters, their relations to non-OPEC countries, to international oil companies and to key consuming countries. It will try to shed light on the role that OPEC has played in the international history of the 20th century, as well as on the challenges the organization is facing with the rise of the climate change debate and the pressures to move toward a less carbon-dependent economy. OPEC being the most sophisticated and successful international organization of raw materials producers from the Global South, its success and failures can also speak in general to the prospect of international cooperation on raw materials and natural resources and contribute to a better understanding of the key issues at stake both for producers and consumers.
The OPEC Evolution and Beyond the 'Global Oil Policies'
International Journal of Analytical Research and Review , 2023
OPEC has been playing a crucial role in regulating oil policies globally since its establishment in the 1960s. Its major policy objective has remained to safeguard the interests of oil-producing and consuming countries through stable supply and regulation of oil prices. It rose to international prominence during the 1970s, as its Member countries took control of their domestic petroleum industries and began to play a greater role in world oil markets. This oil cartel's policy influenced the global political economy in 1973 led oil crisis. Its economic clout became politically significant to protect its ideological interests. However, the OPEC policy-makers had not kept the organization's policy objectives limited to economic interest but focused also on the socialenvironmental causes of low-middle developing countries. The institutional mechanism of 'The OPEC Fund for International Development' has been consistently looking at causes of social development. After the 1992 UN Earth Summit in Rio, the outlook of the world changed toward energy in more sustainable and environmentally friendly. While increasing energy demand, the factor of clean-safe energy became a crucial part of consuming countries' energy policies. So, the profile of the 'energy mix' changed, thereby influencing the OPEC policy objectives as well. OPEC policymakers have also incorporated the requirement of environmentally sustainable energy into their frameworks. This research paper will analyze the evolution of the OPEC, major policy objectives, and the shift in policy since the 1990s towards environmentally and socially reliable.
OPEC and the international oil market: Can a cartel fuel the engine of economic development?
International Journal of Industrial Organization, 2007
The OPEC cartel was formed to promote two economic goals, one microeconomiclow oil market volatilitythe other macroeconomicpromotes economic development of its members. These goals create a tension since the cartel's single tool is output quotas. Using this dual micro/macro perspective we analyze oil exporting countries' behavior. We find that the effects of the cartel's choices will be reflected in oil market stability, long-term macroeconomic development, and international oil market structure. If an oil producing country cares about both oil industry profits and macroeconomic stability, the goal of output stability may be inconsistent with cartel membership.
Albrecht Daniel Thaer-Institut für Agrar- und Gartenbauwissenschaften eBooks, 2015
This paper analytically addresses the question, to which degree the market power of OPEC is the key reason for the world market price of crude oil to exceed marginal extraction costs. Describing the various determinants of both extraction costs and the oil price constitutes the basis for an in-depth discussion on the relative impact of these variables. We argue that despite OPEC's significant market power, other forces such as steadily increasing global demand, temporary supply constraints, or a growing importance of resource pragmatism and nationalism play a much greater role than OPEC's market power.
OPEC's Dominance of the Global Oil Market: The Rise of the World's Dependency on Oil
The Middle East Journal, 2004
This article examines the rise of the world's dependency on oil and the Organization of Petroleum Exporting Countries' (OPEC) dominance of the global oil market during the 1970s, OPEC's fall in the 1980s, and its resurgence in the 1990s. It contends that efforts by the Global North's countries to conserve fuel and to develop alternative energy sources have proved a much more arduous task than at first thought. Although there has been some progress in this area, OPEC continues to dominate the world oil market in the twenty-first century, as global demand for and dependence on oil continue to rise. A call is issued for solutions.