Understanding OPEC: An Economic Analysis Essay -- Oil Economics Econom

Understanding OPEC An Economic AnalysisIn the last few months, much has been give tongue to of Iraqs invasion of Kuwait in 1990. Interestingly enough, one of Iraqs motivating factors was stintings. Kuwait provided Iraq with a pretext for war as it violated the economic policies of the Organization of Oil-Exporting Countries by exporting oil above its quotas. This is but one chapter in the complicated history of OPEC. OPEC is an international assembly of nations which co-ordinates and unifies the petroleum policies of eleven countries and has enjoyed the highs and weatherworn the lows of oil prices in the last few decades. To solve their problems, both member countries and oil-importing countries must address the complex nature of oil price elasticity in making their policy decisions.An analysis of OPECs policies demands a cursory review of its history and the recent and current structure of the oil market. Acting in concert, OPECs eleven member countries set per country quotas for o il production to limit the oil supply. It seeks to co-ordinate and unify their petroleum policies in order to promote perceptual constancy and harmony in the oil market (OPEC 2). In other words, OPEC seeks to secure a long-term profitable stream of income for OPEC members by exploiting its market power in an oligopoly.OPEC has commanded tremendous market power in the oil industry ever since Iran, Iraq, Kuwait, Saudi Arabia and Venezuela founded it on September 14, 1960. Today, the number of member countries has risen to 11 and today includes Algeria, Indonesia, SP Libyan AJ, Nigeria, Qatar, and the United Arab Emirates. Together, these countries have pooled their tremendous resources OPEC Members Countries produce about 41 per cent of the worlds crude oi... .... 2000. Organization of the Petroleum Exporting Countries. 19 April 2003 .Answers to frequently asked questions about the petroleum industry. 2000. Organization of the Petroleum Exporting Countries. 19 April 2003 .Foreman, Gary. Use the Law to Save Thousands. Soho America. 19 April 2003 www.soho.org/Finance_Articles/Spply_and_Demand.htm.Hwang, M. J. and C. W. Yang. Unstable Price Elasticity and utmost World Oil Prices. October 2001. The 52nd International Atlantic Economic Conference. 19 April 2003 www.iaes.org/conferences/past/philadelphia_52/prelim_program/d00-1/index.htm.Taylor, Jerry. No Need to Panic over Oil Prices Dont recollect the Politicians Rhetoric. 2003. Cato Institute. 19 April 2003 .