Word: cartelism
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Last week's action, the second OPEC money grab in only three months, creates an official split in the cartel's price structure. After three days of closed-door bickering between avaricious hard-liners like Iran and Algeria and so-called moderates like Saudi Arabia and tiny Qatar, the cartel finally settled on its two-tier pricing "compromise." In theory, it would let members' consciences be their guide in deciding just how much money to charge-anywhere from $18 to $23.50 per bbl. In practice, the scheme seems little more than a device for institutionalizing chaos, which...
...bench mark," price of crude to a record $18 per bbl., up fully 42% since the first of the year. That is the price that Saudi Arabia, Qatar and the United Arab Emirates will charge. The other ten OPEC members, which account for almost two-thirds of the cartel's exports, will sell at $20 per bbl. Reason: most are already charging an average of $17.50 per bbl. as a result of premiums and surcharges, and a rise of a mere 500 per bbl. hardly seemed worth the trouble...
...specially attractive crudes, such as Nigeria's and Libya's low-sulfur oil, which is now much in demand for refining into gasoline. Veteran observers of past OPEC behavior expect the differentials soon to be turning up as part of the price for almost any grade of cartel crude. As a portent of things to come, the Algerians announced that they would immediately start charging the top dollar possible...
Though the cartel made a halfhearted effort to pass off the new price structure as a ceiling on the rising cost of crude, not even the delegates seemed to believe it. With world demand exceeding supply, nations appear willing to pay virtually any price. Said one Indonesian delegate: "We're faced with a shortage of oil that seems irreversible. It is hard to believe that prices can be kept down." The former U.S. Ambassador to Saudi Arabia, James Akins, now a private oil-industry consultant, asserts, "The first time that any oil-importing nation offers a price above...
...adds injury to insult when hardliners like Iran and Libya keep threatening to cut back production in order to prop up prices. Remarked one middle-of-the-road delegate: "You just cannot believe how greedy these Iranians have become. They think they have invented the wheel." One of the cartel's greediest leaders, Libya's strongman, Colonel Muammar Gaddafi, touched off a mini-panic on Wall Street at week's end. An Arab magazine quoted him as threatening to halt Libyan oil exports for up to four years and appealing to other oil producers...