Word: cartelism
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...particularly poor moment. Despite ample world supplies of oil now, fear of future shortages is prompting stockpiling and sending prices higher. The turmoil in Iran continues to give rise to worries of new production cuts by one of OPEC's most important oil suppliers, and the cartel itself now seems certain to announce new price increases at its December meeting in Venezuela. The Saudis, who have held their price at the cartel minimum of $18 per bbl., may raise it closer to the levels of other producers: $23.50 or more. At the same time, several OPEC producers have announced...
...COMPANIES understandably want to maximize their profits, but it is absurd for them to call this process "free enterprise" when a cartel controls the supply. A federal oil corporation can restore free enterprise to the industry, its proponents should argue. The public company could explore domestically, seek out non-OPEC foreign sources, negotiate with OPEC, and serve as a yardstick to force other oil firms to compete. In contrast to the competitive public outfit, the existing oil companies can be labeled monopolistic, centralized private bureaucracies. A private oil company is just as large and bureaucratic as a government agency; with...
...controls by borrowing in the Eurodollar market. The amount of Eurodollars available for borrowing sharply increased after the 1973-74 jump in oil prices. Members of the Organization of Petroleum Exporting Countries, unable to spend their petroprofits fast enough, began parking many surplus dollars in banks outside the U.S. Cartel members now have $74 billion in these Eurodollar deposits. Bankers also started lending large amounts of Euromarks and Euro-francs, which are West German marks and Swiss francs deposited outside their home countries...
...their crude, and other producers seem likely to follow suit. What really alarmed oil consumers was that the Libyan and Iranian rise, like that announced by Mexico a week before but unlike those announced by Iraq or earlier by Kuwait broke through the $23.50 per bbl. price the cartel set in June as a "ceiling" for at least six months...
...connection. Connally must be praying for a cold winter so he can remind us how warm we would be with a fresh supply of Arab oil in our furnaces. But resting our hopes for an energy solution on OPEC is illusory and will invite further blackmail from the cartel. The U.S. should reaffirm its commitment to Israel and ignore Connally's easy answer...