Word: cartels
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Dates: during 1980-1989
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...roughhewn and tieless, was Seyyed Mohammad Gharazi of Iran. The issue before them was the control of OPEC itself. The result: a draw that deepened the most severe crisis in OPEC'S 22-year history and raised doubts about whether the organization can ever function as an effective cartel...
...actual agreement was what was left out. The conference did nothing to resolve the crucial question of how much oil each member should produce. That leaves OPEC without a formal method for limiting its output to maintain its price. Such a method is the heart of a true cartel. Notes John Lichtblau, president of the Petroleum Industry Research Foundation: "To agree on an overall production level does not mean that much when you cannot decide how to set this level. The question of who will produce what is really the most important thing...
Also in 1982 the OPEC countries appear to have recorded a deficit in their international current-account balance for the first time since they emerged as a major price-setting force. Consequently, the poorer OPEC nations are under pressure to produce more oil to keep revenues flowing. The cartel first tried to restore order last March by assigning production quotas. That effort was an instant failure: some members overshot their ceilings by 100% or more...
...long-term outlook for OPEC and oil prices is squarely tied to the health of the world economy, which shows few signs of rebounding any time soon. A vigorous recovery, however, could rejuvenate the cartel by driving up demand. Says James McKie, a University of Texas energy expert and member of the TIME Board of Economists: "If world recovery does proceed and the growth of demand resumes, I would expect OPEC to regain at least the amount of clout that it had before the Iranian crisis." OPEC may be gravely wounded, in other words, but rumors of its imminent demise...
...rates began at last to decline. Even so, many countries found themselves increasingly strapped for dollars with which to pay their mountainous debts. Among the most surprising victims were a number of oil-exporting nations: Mexico and Nigeria, to name two. Two years ago, the 13-nation OPEC oil cartel gloatingly held the world at ransom for crude oil at prices that eventually exceeded $40 per bbl. But the combination of recession and conservation caused prices to weaken, and by year's end the price of crude had dropped to $30 per bbl. and appeared to be headed even...