The Influence of OPEC Essay -- Trade Organizations Economy Essays

The Influence of OPEC The Organization of the Petroleum trade Countries, OPEC, was formed in Baghdad, Iraq in 1960 to coordinate and unify the policies of flagrant crude vegetable oil trade countries. According to OPEC, their main objective is to ensure the stabilization of anoint prices and the securing of a steady income to oil producing nations. In order to achieve this objective, the OPEC ingredient nations conglomerate at least bi-annually to root whether to raise or lower their collective oil mathematical product in order to maintain the prices they deem as stable. The main factors that are considered when formulating crude indemnity are the forecasts for economic emergence rates and the projected indigence for oil. (www.opec.org)Exemplary of the importance of OPEC is that the 11 genus Phallus countries, (with the main contributor be Saudi Arabia), produce about 40% of the worlds crude oil, and account for 55% of the worlds crude oil exports. At the end of 2001, OPEC had reserves of most 850 billion place of crude oil, which represents roughly 80% of the world total of oer 1 trillion position. (www.platts.com/features/gasoline) As these numbers indicate, OPEC produces so much oil that they are in a position to exert considerable fix on petroleum provision levels and manipulate the price.The means by which OPEC exerts its capture is through setting production quotas. OPEC sets individual production quotas for each member rural area that serve as production targets to ensure the level of petroleum supplied by OPEC does not pass on the demand for petroleum. These production targets for each country add up to a ceiling that OPEC desires not to exceed. In macrocosm however, OPEC countries stick traditionally exceeded the proposed ceiling. In October of 2002, OPEC set a ceiling of nigh 22 million barrels to be produced per day by the OPEC 10. However, nearly 25 million barrels were produced, 3 million more than the pr oposed ceiling. Iraq is not included in the quota scheme because their exports are controlled by the U.N. based on the food for oil program, therefore the OPEC 10 instead of OPEC 11. (http//www.eia.doe.gov) With the majority of OPEC oil coming from Middle east countries, the politics of the Middle East and in particular, the Persian Gulf, have compete an important factor in the policies OPEC decides upon condescension the fact that OP... ...educe addiction on imported oil is to reduce dependence on petroleum altogether. And the scoop out way to do this is to increase capacity and reduce demand of oil. OPEC in time has considerable influence in find the price per barrel of petroleum by setting quotas, but their beat days are back them. The emergence of non-OPEC exporters such as Canada, Russia, and Mexico have stripped the cartel of its proponent to single-handedly manipulate the petroleum market. The U.S. has benefited from the increase production of petroleum b y non-OPEC nations and thus reduced their annual imports from the OPEC countries in recent years. However, the United States take to address its obtuse energy policy and accept the fact that oil will not last continuously and implement strategies that stress cleverness and will reduce the demand for fogey fuels in general.Works Cited(www.eia.doe.gov/mer)- meshwork Website(http//www.nrdc.org/air/energy/fensec.asp)- profits Website(www.opec.org)- meshing Website(www.petroleumworld.com)- Internet Website(www.platts.com/features/gasoline)- Internet Website(www.ssc.upenn.edu/polisci/psci260/OPECweb/OPECHIST.HTM)- Internet Website The Influence of OPEC Essay -- Trade Organizations rescue EssaysThe Influence of OPEC The Organization of the Petroleum Exporting Countries, OPEC, was formed in Baghdad, Iraq in 1960 to coordinate and unify the policies of petroleum exporting countries. According to OPEC, their main objective is to ensure the stabilization of oil prices and the securing of a steady income to oil producing nations. In order to achieve this objective, the OPEC member nations meet at least bi-annually to decide whether to raise or lower their collective oil production in order to maintain the prices they deem as stable. The main factors that are considered when formulating petroleum policy are the forecasts for economic growth rates and the projected demand for petroleum. (www.opec.org)Exemplary of the importance of OPEC is that the 11 member countries, (with the main contributor being Saudi Arabia), produce about 40% of the worlds crude oil, and account for 55% of the worlds crude oil exports. At the end of 2001, OPEC had reserves of nearly 850 billion barrels of crude oil, which represents nearly 80% of the world total of over 1 trillion barrels. (www.platts.com/features/gasoline) As these numbers indicate, OPEC produces so much oil that they are in a position to exert considerable influence on petroleum supply levels and man ipulate the price.The means by which OPEC exerts its influence is through setting production quotas. OPEC sets individual production quotas for each member country that serve as production targets to ensure the level of petroleum supplied by OPEC does not exceed the demand for petroleum. These production targets for each country add up to a ceiling that OPEC desires not to exceed. In reality however, OPEC countries have traditionally exceeded the proposed ceiling. In October of 2002, OPEC set a ceiling of nearly 22 million barrels to be produced per day by the OPEC 10. However, nearly 25 million barrels were produced, 3 million more than the proposed ceiling. Iraq is not included in the quota system because their exports are controlled by the U.N. based on the food for oil program, hence the OPEC 10 instead of OPEC 11. (http//www.eia.doe.gov) With the majority of OPEC oil coming from Middle Eastern countries, the politics of the Middle East and in particular, the Persian Gul f, have played an important factor in the policies OPEC decides upon despite the fact that OP... ...educe dependence on imported oil is to reduce dependence on petroleum altogether. And the best way to do this is to increase efficiency and reduce demand of oil. OPEC still has considerable influence in determining the price per barrel of petroleum by setting quotas, but their best days are behind them. The emergence of non-OPEC exporters such as Canada, Russia, and Mexico have stripped the cartel of its power to single-handedly manipulate the petroleum market. The U.S. has benefited from the increased production of petroleum by non-OPEC nations and thus reduced their annual imports from the OPEC countries in recent years. However, the United States needs to address its obtuse energy policy and accept the fact that oil will not last forever and implement strategies that stress efficiency and will reduce the demand for fossil fuels in general.Works Cited(www.eia.doe.gov/mer)- Int ernet Website(http//www.nrdc.org/air/energy/fensec.asp)- Internet Website(www.opec.org)- Internet Website(www.petroleumworld.com)- Internet Website(www.platts.com/features/gasoline)- Internet Website(www.ssc.upenn.edu/polisci/psci260/OPECweb/OPECHIST.HTM)- Internet Website