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Title: Strengths of OPEC

Abstract

The major distinction of the Organization of Petroleum Exporting Countries is obvious even to the casual observer: the nations composing it constitute the greatest monopoly in history; its tribute now is over $100 billion a year. For the immediate future, OPEC's elements of strength look more important than its elements of weakness. The cartel will not soon disappear. The forces acting against the cartel are subsumed in the fact of excess capacity. This is the traditional nemesis of cartels, since it puts in motion the sequence of small price reductions by some sellers to gain additional sales volume, then competitive or matching reductions. To preserve the cartel, each member must avoid acting for his own independent good, and must do what is best for the group as a whole. The greater the temptation to act independently the greater the fear of others' independent action, and the higher the probability of severe erosion or breakdown. So the fate of the cartel depends essentially on the strength of exogenous factors, demand and uncontrolled supply, versus the strength of an endogenous factor, the cohesion of the group. All too often either one of these factors is treated in isolation as though the othermore » were not there.« less

Authors:
Research Org.:
Massachusetts Inst. of Tech., Cambridge
OSTI Identifier:
7353609
Alternate Identifier(s):
OSTI ID: 7353609
Resource Type:
Journal Article
Journal Name:
Resources; (United States)
Additional Journal Information:
Journal Volume: 52; Other Information: Adapted from a lecture given at the University of Illinois in Urbana, December 4, 1975
Country of Publication:
United States
Language:
English
Subject:
29 ENERGY PLANNING, POLICY AND ECONOMY; 02 PETROLEUM; MIDDLE EAST; OPEC; PETROLEUM; DEMAND FACTORS; CHARGES; ENERGY DEMAND; ENERGY SUPPLIES; GOVERNMENT POLICIES; INCOME; LAWS; OPERATION; PRODUCTION; ENERGY SOURCES; FOSSIL FUELS; FUELS; INTERNATIONAL ORGANIZATIONS 294002* -- Energy Planning & Policy-- Petroleum; 021000 -- Petroleum-- Legislation & Regulations

Citation Formats

Adelman, M.A. Strengths of OPEC. United States: N. p., Web.
Adelman, M.A. Strengths of OPEC. United States.
Adelman, M.A. . "Strengths of OPEC". United States.
@article{osti_7353609,
title = {Strengths of OPEC},
author = {Adelman, M.A.},
abstractNote = {The major distinction of the Organization of Petroleum Exporting Countries is obvious even to the casual observer: the nations composing it constitute the greatest monopoly in history; its tribute now is over $100 billion a year. For the immediate future, OPEC's elements of strength look more important than its elements of weakness. The cartel will not soon disappear. The forces acting against the cartel are subsumed in the fact of excess capacity. This is the traditional nemesis of cartels, since it puts in motion the sequence of small price reductions by some sellers to gain additional sales volume, then competitive or matching reductions. To preserve the cartel, each member must avoid acting for his own independent good, and must do what is best for the group as a whole. The greater the temptation to act independently the greater the fear of others' independent action, and the higher the probability of severe erosion or breakdown. So the fate of the cartel depends essentially on the strength of exogenous factors, demand and uncontrolled supply, versus the strength of an endogenous factor, the cohesion of the group. All too often either one of these factors is treated in isolation as though the other were not there.},
doi = {},
journal = {Resources; (United States)},
number = ,
volume = 52,
place = {United States},
year = {},
month = {}
}