Word: cartelizing
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...surpluses and strains confronting OPEC may be only temporary because they are created largely by the widespread recession. If the rest of the world is to bend or break the cartel, the pressure on OPEC must be continued. And the only effective means of doing that is through tough mandatory conservation measures and quotas or taxes on oil imports...
...oversupply has led to subtle price discounting, which enables some petroleum-producing states to unload part of their excess while keeping the.of-ficial price intact. OPEC'S price is pegged to the $10.46 that Saudi Arabia charges for its high-quality light oil; all other cartel crude is priced above or below that figure, depending on quality, shipping costs and other factors. Algeria's price has dropped from $14 per bbl. a year ago to $12 now, largely because premium charges for high quality and other factors have been removed. Libya has recently been forced to trim...
Most of the other OPEC members need the cartel and would probably not dare cut prices individually. Of course there is a point at which some countries would do better outside the cartel, but it is uncertain how low demand would have to fall before that occurred...
...OPEC countries' purchasing power has also diminished because of the recent decline in the value of the dollar, which is the principal currency for payment of oil. When the dollar's value depreciates, the oil states have to spend more for their imports from Europe and Japan. Cartel members will meet in Vienna this week, and the problems of inflation, the weakening dollar and the oil glut are certain to be high on their agenda...
...producers' would-be imitators can claim much success. An attempt by several Latin American countries to jack up world banana prices through a universal $1-per-box export tax failed because Ecuador felt that it could not afford to go along. A cartel of four copper-exporting countries agreed last November to try to force up prices by reducing shipments 10%. But demand and prices have continued to fall, and last week the copper countries decided to fight back by holding another 5% of their production off the market. The copper countries are now considering holding more of their...