Word: opec
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...OPEC heads for a showdown
...production ceiling of 18.5 million bbl. per day, down from 19.2 million bbl. per day currently, and to parcel out the resulting cuts. That is something that the fiercely nationalistic members of the organization have never before managed to achieve. Many Western analysts, emboldened by strife-torn OPEC's recent setbacks, are predicting that the effort will fail, putting further pressure on prices, which have already slipped by about 3.6% in the past year, to an average of $33.55 per bbl. Others, recalling OPEC'sS clout during the 1970s, are more wary. Says Standard Oil of Indiana...
Even if the Saudis agree to reduce production, other OPEC countries might still jump in and attempt to grab a larger share of the market and boost their own production. Such is the severity of the current strains within OPEC. Says Marshall Thomas, markets editor of Petroleum Intelligence Weekly: "If they don't meet and act fairly soon, they are going to have a problem holding them selves together...
...OPEC has long been labeled a cartel, but it is really little more than an association of bazaar traders. A successful cartel, says any definition, must be able to control production and thereby set prices in good and bad times. The failure of OPEC to do that now makes it a sort of fair-weather cartel, strong in the late 1970s when the world's economies were buoy ant and had high demand for its oil, but weak now when Europe and the U.S. are less dependent upon its energy...
...experts predict the imminent demise of OPEC. It will always serve the self-interest of the oil producers to get together and try to influence prices. The organization did that for more than a decade after its founding in 1960, but hardly anyone but energy specialists noticed them. It was only in 1973, after the industrialized countries had allowed their economies to become hostages to OPEC oil, that the Middle East producers were able to begin dictating world petroleum prices. As long as the U.S. and Western Europe continue to conserve energy and produce more of their...