In defense of OPEC
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), Vol. 100:3
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
POLICY AND ECONOMY
OPEC
EVALUATION
PETROLEUM
SUPPLY AND DEMAND
CARTELS
CONSUMPTION RATES
ENERGY SHORTAGES
ENERGY SUPPLIES
EXPORTS
GOVERNMENT POLICIES
ORGANIZING
PETROLEUM INDUSTRY
PRODUCTION
RESOURCE DEPLETION
SAFETY
SECURITY
STANDARD OF LIVING
ENERGY SOURCES
FOSSIL FUELS
FUELS
INDUSTRY
INTERNATIONAL ORGANIZATIONS
OIL-EXPORTING COUNTRIES
294002* - Energy Planning & Policy- Petroleum