Word: cartelism
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Again and again, the cartel formed by the Organization of Petroleum Exporting Countries raised the price of oil until it reached unprecedented and numbing heights. The producing nations' "take" from a barrel of oil, less than $1 at the start of the decade, was lifted from $1.99 before the Arab-Israeli war 15 months ago to $3.44 at the end of 1973 to more than $10 at the end of 1974. The result is the greatest and swiftest transfer of wealth in all history: the 13 OPEC countries earned $112 billion from the rest of the world last year. Because...
...rest of the world could encounter such compounded problems that 1974 would be remembered as an easy year. With oil at $10 a bbl., OPEC would charge the world an other $600 billion in the next five years. To pay the bill, the 137 nations outside the cartel would have to deliver one-quarter of their total exports to OPEC's elite 13 countries. It would be impossible for the oil importers to transfer so much of their production?or for OPEC nations to absorb it all. The most frightening figure for the future is that OPEC nations stand...
Conserving to Crack the Cartel...
Thus, even with the best of recycling, the importing nations will be vulnerable. Says Walter Levy, the world's leading oil consultant: "The world economy cannot survive in a healthy or remotely healthy condition if cartel pricing and actual or threatened supply restraints of oil continue." In many ways, Western democracies face a wartime-like crisis, but until'lately they have reacted as they did during the 1939-40 "phony war." Only by cooperating among themselves can the importers counter the cartel's control over their destinies. Recently they have begun to make tentative moves to accomplish three
...Western nations will have no real bargaining strength until they show that they are taking strong measures to conserve. By significantly reducing demand, the big buyers of oil might force OPEC into production cuts that some cartel members may eventually find intolerable. Cutbacks would be particularly rough for Iran and Iraq, both of which plan substantial production increases hi the next few years to finance their grand development programs. Rather than reduce output, other populous countries with ambitious development schemes?Nigeria, Venezuela, Indonesia?might be tempted to buck the cartel by selling below the fixed price. Ecuador, which badly needs...