An Oil Cartel May Be Fueled By Greed And Restrained By Fear
When organizations get together to protect the price of a product that they manufacture they can fall foul of legislation and find themselves subject to heavy penalties. When countries do the same thing they are immune. That is the difference between a private and a public cartel. OPEC is a public oil cartel. The acronym is derived from the words Organization of Petroleum Exporting countries.
Twelve major oil producing companies have belonged to OPEC since 1965. Most of these countries had few human or agricultural resources when the organization was formed. However, they soon realized that the health of exports depends upon the well being of importing countries.
Some of the twelve OPEC countries are ruled by despots or dictators and they soon realized that their easily amassed wealth was inextricably linked with the well being of developed countries which bought their product. As this realization dawned they began to invest in politically stable countries driven by fear that their worldly assets would become worthless in a world such as their own. In this way the mission changed from price protection to protecting a balance between supply and demand.
OPEC countries are thought to control about eighty percent of the world's fossil fuels and this gives them a certain amount of geopolitical power. However new discoveries have been made in parts of the world such as Britain, America and Russia. This has somewhat diminished the power of OPEC and encouraged cooperation.
It is obviously in the interests of fossil fuel producers to have people own petroleum driven cars. This may be part of the reason why the development of electric cars has been possible but excruciatingly slow for many years. However, environmental realities are now forcing governments to take action before the world clogs itself up with carbon to a disastrous extent. Suddenly, electric cars are not only possible but also economical and increasingly fashionable.
An oil cartel must balance the greed for high prices against the fear of losing demand for its product to alternatives such as bio fuels and battery driven cars. Under current circumstances the trend must be towards keeping prices low enough to sustain demand in the face of available alternatives.
Twelve major oil producing companies have belonged to OPEC since 1965. Most of these countries had few human or agricultural resources when the organization was formed. However, they soon realized that the health of exports depends upon the well being of importing countries.
Some of the twelve OPEC countries are ruled by despots or dictators and they soon realized that their easily amassed wealth was inextricably linked with the well being of developed countries which bought their product. As this realization dawned they began to invest in politically stable countries driven by fear that their worldly assets would become worthless in a world such as their own. In this way the mission changed from price protection to protecting a balance between supply and demand.
OPEC countries are thought to control about eighty percent of the world's fossil fuels and this gives them a certain amount of geopolitical power. However new discoveries have been made in parts of the world such as Britain, America and Russia. This has somewhat diminished the power of OPEC and encouraged cooperation.
It is obviously in the interests of fossil fuel producers to have people own petroleum driven cars. This may be part of the reason why the development of electric cars has been possible but excruciatingly slow for many years. However, environmental realities are now forcing governments to take action before the world clogs itself up with carbon to a disastrous extent. Suddenly, electric cars are not only possible but also economical and increasingly fashionable.
An oil cartel must balance the greed for high prices against the fear of losing demand for its product to alternatives such as bio fuels and battery driven cars. Under current circumstances the trend must be towards keeping prices low enough to sustain demand in the face of available alternatives.
