In defense of OPEC

Journal Article · Mon Aug 13 04:00:00 EDT 1979 · Fortune; (United States)

OSTI ID:6108302

Olayan, S S

Mr. Olayan examines the notion that if OPEC could be broken up, all the woes of the US would vanish. He feels that this campaign ignores some important facts about the world oil market. The most fundamental fact about energy is that there is not enough oil in the world to permit the wasteful use to which the US has become accustomed. Most of the OPEC countries are producing at full capacity and only a few (such as Saudi Arabia, Libya, and Kuwait) are producing at a higher level. It is in the interests of neither the producer nations nor the consumer nations that this small margin of additional production be exploited at this time. This safety margin is the world's only insurance against a real disaster. In the Middle East, whose development process began only recently, it is essential that their sole resource not be exhausted in one generation. The price mechanism has apportioned other commodities in world trade, so prices must control the supplies of oil, the author suggests. Since OPEC is castigated each time its price goes up, the author suggests that maybe OPEC should abolish OPEC. Each member could then sell oil to whom and when each liked at any price, and be freed from the responsibility OPEC has carried out for trying to keep order. The author concludes by saying that if Americans rethought this question of what breaking up OPEC would really mean to the US, they would realize that it is a self-defeating aim.

• Research Organization: Morgan Guaranty Trust Co., New York City, NY
• OSTI ID: 6108302
• Journal Information: Fortune; (United States), Journal Name: Fortune; (United States) Vol. 100:3; ISSN FORTA
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
294002* -- Energy Planning & Policy-- Petroleum
CARTELS
CONSUMPTION RATES
ENERGY SHORTAGES
ENERGY SOURCES
ENERGY SUPPLIES
EVALUATION
EXPORTS
FOSSIL FUELS
FUELS
GOVERNMENT POLICIES
INDUSTRY
INTERNATIONAL ORGANIZATIONS
OIL-EXPORTING COUNTRIES
OPEC
ORGANIZING
PETROLEUM
PETROLEUM INDUSTRY
PRODUCTION
RESOURCE DEPLETION
SAFETY
SECURITY
STANDARD OF LIVING
SUPPLY AND DEMAND