1. HaroldSowards
Energy
2-5-15
OPEC Objectives
1. Coordinate and unify policies– According to the guidelines, a member of the
Ministerial Monitoring Committee, which consists of an oil minister from each member
country, meets in ordinary sessions twice a year. I want to say that by doing this it is very
effective in coordinating and unifying all the policies amongst members even when some
of the countries involved may want to express their own interests.
2. Safeguard individual and collective interests of member countries- In my opinion, the
collective interests of these member countries regarding oil prices aren’t making any
ground and have to compromise to avoid internal struggles. However, political issues
always seem to be a concern in this as well and often lead to tensions regarding oil
production. They have not prepared the countries to be ready for the world without oil
and thus in my opinion do a very poor job in safeguarding these interests.
3. Stabilize oil prices- basically they negotiate on oil price positions and whichever number
they can all agree on is what happens. They also regulate prices and oil sharing
production by regulating crude oil supplies, however this quota system is very flawed.
4. Eliminate harmful fluctuations- This depends on how you look at this, in terms of
regular oil prices there has been many inflations that are taking care of over time,
however in terms of actual oil, there hasn’t been an inflation since 1980. Every time
expectations change for certain things, so they can’t always meet the expectations needed
2. HaroldSowards
Energy
2-5-15
every time without something else being affected, so in my opinion they have done a
good job eliminating these fluctuations.
5. Secure steady income for producing countries –Most countries want to trade
something along with provide money for a sustainable amount of oil, which results in the
producing countries being able to get things they need for their citizens to survive.
6. Provide efficient, economic and regular supply of petroleum.-For one they have a lot
of oil reserves that they can rely on when things get rough, because OPEC’s crude oil
production is expected to grow 10% more with each quarter century. OPEC has a policy
of maintaining stability in the oil market, and its Member Countries have often done this
by increasing or decreasing the amount of oil they produce. However, they are not the
only source of oil in the market and therefore can’t guarantee the movement of oil prices,
or the availability of supplies to all consumers at all times.
In my opinion, they’ve been providing this supply for a while now, so unless the whole
market demand is through the rough and extinguishes the reservoirs, they will be able to
provide a steady supply of oil.
7. Return a fair amount on capital investments- They have this FUND that they use to
distribute to the countries who need it the most for whatever they need it used for. This
helps keep all the countries from fighting with each other about revenue and helps keep
the market and trade levels growing and continuing. In my opinion, this seems like a bad
3. HaroldSowards
Energy
2-5-15
idea if two countries need it at the same time and take all the excess money that is to be
distributed amongst the rest of the members, however, if it works they there should be no
need to change it unless there is a call to do so.
OPEC is called a cartel. How is a cartel different from a monopoly?
Well, a cartel is a group of companies who work together to corner a market, while a monopoly
is one company who controls a market.
To what regulations, if any, is a cartel subject?
Competition laws in the European Union and anti-trust laws in the US.
Who enforces any such regulations?
Well, mainly the individual governments of other countries, however, in the case of OPEC I
would have to say it would be the United Nations enforcing them.
