OPEC
166346
226182949
2008-07-17T05:37:36Z
203.215.120.145
/* History */
[[Image:Flag of OPEC.svg|thumb]]
The '''Organization of the Petroleum Exporting Countries''' ('''OPEC''') is a group of twelve [[state]]s<ref>[http://news.bbc.co.uk/1/hi/business/689609.stm BBC NEWS | Business | Opec: The oil cartel<!-- Bot generated title -->]</ref><ref>[http://www.econlib.org/library/enc/OPEC.html OPEC, by Benjamin Zycher: The Concise Encyclopedia of Economics: Library of Economics and Liberty<!-- Bot generated title -->]</ref> made up of [[Iran]], [[Iraq]], [[Kuwait]], [[Qatar]], [[Saudi Arabia]], the [[United Arab Emirates]], [[Libya]], [[Algeria]], [[Nigeria]], [[Angola]], [[Venezuela]] and [[Ecuador]]. Recently, [[Indonesia]] has decided to leave the organization, a move which was completed in [[May 2008]]. The organization has maintained its headquarters in [[Vienna]] since 1965<ref name=opechist>[http://www.opec.org/aboutus/history/history.htm A brief history of OPEC</ref>, and hosts regular meetings among the oil ministers of its member states.
According to its [[statute]], the principal goal is the determination of the best means for safeguarding their interests, individually and collectively; devising ways and means of ensuring the stabilization of prices in international [[oil industry|oil markets]] with a view to eliminating harmful and unnecessary fluctuations; giving due regard at all times to the interests of the producing nations and to the necessity of securing a steady income to the producing countries; an efficient, economic and regular supply of [[petroleum]] to consuming nations, and a fair return on their capital to those investing in the petroleum industry."<ref>Chapter I, Article 2 of [http://www.opec.org/library/opec%20statute/pdf/os.pdf The Statute of the organization of the Petroleum Exporting Countries] (as amended)</ref>
OPEC's influence on the market has been negatively criticized. Several members of OPEC alarmed the world and triggered high inflation across both the developing and developed world when they used oil embargoes in the [[1973 oil crisis]]. OPEC's ability to control the [[price of oil]] has diminished somewhat since then, due to the subsequent discovery and development of large [[oil reserves]] in the [[Gulf of Mexico]] and the [[North Sea]], the opening up of [[Russia]], and market modernization. OPEC nations still account for two-thirds of the world's oil reserves, and, as of March 2008, 35.6% of the world's oil production, affording them considerable control over the global market. The next largest group of producers, members of the [[OECD]] and the [[Post-Soviet states]] produced only 23.8% and 14.8%, respectively, of the world's total oil production.<ref>[[BP plc]]. [http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/publications/energy_reviews_2006/STAGING/local_assets/downloads/pdf/table_of_world_oil_production_2006.pdf "British Petroleum table of world oil production"]. Retrieved June 18, 2007. </ref> As early as 2003, concerns that OPEC members had little excess pumping capacity sparked speculation that their influence on crude oil prices would begin to slip.<ref>[http://english.aljazeera.net/English/archive/archive?ArchiveId=6664 Al Jazeera English - Archive - Is Opec Losing Control Over Oil Price?<!-- Bot generated title -->]</ref><ref>[http://www.businessweek.com/magazine/content/03_03/b3816074.htm BW Online | January 20, 2003 | Is OPEC About to Lose Control of the Spigot?<!-- Bot generated title -->]</ref>
==History==
[[Image:OPEC01.jpg|right|thumb|250px|OPEC headquarters in Vienna]]
[[Venezuela]] was the first country to move towards the establishment of OPEC by approaching [[Iran]], [[Iraq]], [[Kuwait]] and [[Saudi Arabia]] in 1949, suggesting that they exchange views and explore avenues for regular and closer communications between them. In September 1960, at the initiative of the Venezuelan Energy and Mines minister [[Juan Pablo Pérez Alfonzo]] and the Saudi Arabian Energy and Mines minister [[Abdullah al-Tariki]], the governments of [[Iraq]], [[Iran]], [[Kuwait]], [[Saudi Arabia]] and [[Venezuela]] met in [[Baghdad]] to discuss the reduction in price of crude oil produced by their respective countries. OPEC was founded in Baghdad, triggered by a 1960 law instituted by American President Dwight Eisenhower that forced quotas on Venezuelan oil imports in favor of the Canadian and Mexican oil industries. Eisenhower cited national security, land access to energy supplies, at times of war. Venezuela's president [[Romulo Betancourt]] reacted seeking an alliance with oil producing Arab nations as a preemptive strategy to protect the continuous autonomy and profitability of Venezuela's natural resource: oil.olitical
As a result, OPEC was founded to unify and coordinate members' petroleum policies. Original OPEC members include Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Between 1960 and 1975, the organization expanded to include [[Qatar]] (1961), [[Indonesia]] (1962), [[Libya]] (1962), the [[United Arab Emirates]] (1967), [[Algeria]] (1969), and [[Nigeria]] (1971). [[Ecuador]] and [[Gabon]] were members of OPEC, but Ecuador withdrew on December 31, 1992<ref>[http://www.econlib.org/library/enc/OPEC.html OPEC, by Benjamin Zycher: The Concise Encyclopedia of Economics: Library of Economics and Liberty<!-- Bot generated title -->]</ref> because they were unwilling or unable to pay a $2 million membership fee and felt that they needed to produce more oil than they were allowed to under the OPEC quota. <ref>[http://query.nytimes.com/gst/fullpage.html?res=9E0CE4DF1F3AF93BA2575AC0A964958260 Ecuador Set to Leave OPEC - New York Times<!-- Bot generated title -->]</ref> Similar concerns prompted Gabon to follow suit in January 1995 [http://query.nytimes.com/gst/fullpage.html?res=990CE0D91539F93AA35752C0A963958260].
[[Angola]] joined on the first day of 2007. <ref>[http://www.fin24.co.za/articles/companies/display_article.aspx?Nav=ns&lvl2=comp&ArticleID=1518-1783_2045086 Angola to join Opec on January 1: South Africa: News: International: Fin24<!-- Bot generated title -->]</ref>) Indonesia reconsidered its membership having become a net importer and being unable to meet its production quota. The [[United States]] was a member during its formal [[occupation of Iraq]] via the [[Coalition Provisional Authority]].<ref>{{cite web
|url=http://www.slate.com/id/2170040/nav/tap3/
|title=Go NOPEC! Congress takes on the biggest, baddest cartel of all
|first=Timothy
|last=Noah
|date=2007-07-10
|publisher=Slate
|accessdate=2007-07-11}}</ref> Indicating that OPEC is not averse to further expansion, Mohammed Barkindo, OPEC's Secretary General, recently asked Sudan to join.<ref name=EXPANSION>[http://www.chron.com/disp/story.mpl/business/energy/4374140.html Angola, Sudan to ask for OPEC membership] Houston Chronicle</ref> Iraq remains a member of OPEC, though Iraqi production has not been a part of any OPEC quota agreements since March 1998.
In May 2008, Indonesia left the OPEC group because of the soaring prices and the rising oil demand in East Asia. Economists think that the withdrawal of Indonesia will have little effect on OPEC and on the oil prices even though it has a high percentage in world oil production. {{cn|date=June 2008}}
===The oil weapon===
{{main|1973 oil crisis}}
[[Image:Oil Prices 1861 2007.svg|thumb|300px|Long-term oil Prices, 1861-2007 (orange line adjusted for inflation, blue not adjusted).]]
The persistence of the [[Arab-Israeli conflict]] finally triggered a response that transformed OPEC into a formidable political force. After the [[Six Day War]] of 1967, the Arab members of OPEC formed a separate, overlapping group, the [[Organization of Arab Petroleum Exporting Countries]], for the purpose of centering policy and exerting pressure on the West over its support of [[Israel]]. [[Egypt]] and [[Syria]], though not major oil-exporting countries, joined the latter grouping to help articulate its objectives. Later, the [[Yom Kippur War]] of 1973 galvanized Arab opinion. Furious at the emergency re-supply effort that had enabled Israel to withstand Egyptian and Syrian forces, the Arab world imposed the [[1973 oil crisis|1973 oil embargo]] against the United States and [[Western Europe]]. In the 1970s, the great Western oil conglomerates suddenly faced a unified block of producers.
This Arab-Israeli conflict triggered a crisis already in the making. The West could not continue to increase its energy use 5% annually, pay low oil prices, yet sell inflation-priced goods to the petroleum producers in the Third World. This was stressed by the [[Shah]] of [[Iran]], whose nation was the world's second-largest exporter of oil, and one of the closest allies of the United States in the Middle East at the time. "Of course [the world price of oil] is going to rise," the Shah told the ''[[New York Times]]'' in 1973. "Certainly! And how...; You [Western nations] increased the price of [[wheat]] you sell us by 300%, and the same for [[sugar]] and [[cement]]...; You buy our [[crude oil]] and sell it back to us, refined as [[petrochemical]]s, at a hundred times the price you've paid to us...; It's only fair that, from now on, you should pay more for oil. Let's say 10 times more."<ref>Quoted in Walter LaFeber, ''Russia, America, and the Cold War'' (New York, 2002), p. 292.</ref>
The threat and use of embargo as a weapon, however, triggered a decline in OPEC's power. Western nations developed closer ties to the [[Soviet Union]] and rapidly built up their [[offshore drilling]] in the [[North Sea]] and the [[Gulf of Mexico]], greatly lessening the potential impact of future price shocks induced by OPEC. The effect was not immediate, however. When the Shah of Iran fell in 1979, during the [[Iranian Revolution]], another oil crisis ([[1979 oil crisis]]) ensued.
===The 1980s oil gluts===
{{main|1980s oil glut}}
[[Image:Opecrev.gif|thumb|right|OPEC net oil export revenues for 1971 - 2007. <ref> http://www.eia.doe.gov/emeu/cabs/OPEC_Revenues/OPEC.html </ref>]]
After 1980, oil prices began a six-year decline that culminated with a 46 percent price drop in 1986. This was due to reduced demand and over-production that produced a glut on the world market. This caused OPEC to lose its unity. OPEC net oil export revenues fell in the 1980s.
===Responding to war and low prices===
{{main|Oil price increase of 1990|Oil price increases since 2003}}
Leading up to the 1990-91 [[Gulf War]], Iraqi President [[Saddam Hussein]] advocated that OPEC push world oil prices up, thereby helping Iraq, and other member states, service debts. But the division of OPEC countries occasioned by the [[Iraq-Iran War]] and the [[Iraqi invasion of Kuwait]] marked a low point in the cohesion of OPEC. Once supply disruption fears that accompanied these conflicts dissipated, oil prices began to slide dramatically.
After oil prices slumped at around $10 a barrel in the late 1990s, concerted diplomacy, sometimes attributed to Venezuela’s president [[Hugo Chávez]], achieved a coordinated scaling back of oil production beginning in 1998. In 2000, Chávez hosted the first summit of heads of state of OPEC in 25 years. The next year, however, the [[September 11, 2001 attacks]] against the [[United States]] and the subsequent invasions [[War in Afghanistan (2001–present)|of Afghanistan]] and [[2003 invasion of Iraq]] and [[Occupation of Iraq|subsequent occupation]] prompted a surge in oil prices to levels far higher than those targeted by OPEC during the preceding period. indoonesia withdraw from opec to protect its interest in terms of oil supply.
On [[November 19]], [[2007]], global oil prices reacted strongly as OPEC members spoke openly about potentially converting their cash reserves to the euro and away from the US dollar. <ref>[http://news.yahoo.com/s/ap/20071119/ap_on_bi_ge/oil_prices;_ylt=AqHkJtpxzqh9jxBe_5TkFEmyBhIF]</REF>
==Economics==
OPEC decisions have had considerable influence on international oil prices. For example, in the [[1973 oil crisis|1973 energy crisis]] OPEC refused to ship oil to western countries that had supported Israel in the [[Yom Kippur War]] or [[October War]], which they fought against [[Egypt]] and [[Syria]]. This refusal caused a fourfold increase in the price of oil, which lasted five months, starting on [[October 17]], [[1973]], and ending on [[March 18]], [[1974]]. OPEC nations then agreed, on [[January 7]], [[1975]], to raise [[crude oil]] prices by 10%. At that time, OPEC nations — including many who had recently nationalized their oil industries — joined the call for a [[new international economic order]] to be initiated by coalitions of primary producers. Concluding the First OPEC Summit in [[Algiers]] they called for stable and just commodity prices, an international food and [[agriculture]] program, technology transfer from North to South, and the democratization of the economic system. {{Fact|date=January 2008}} Overall, the evidence suggests that OPEC did act as a [[cartel]], when it adopted output rationing in order to maintain price.<ref>http://fmwww.bc.edu/EC-P/WP318.pdf</ref>
Since currently worldwide oil sales are denominated in [[U.S. dollar]]s, changes in the value of the dollar against other world currencies affect OPEC's decisions on how much oil to produce. For example, when the dollar falls relative to the other currencies, OPEC-member states receive smaller revenues in other currencies for their oil, causing substantial cuts in their purchasing power. After the introduction of the [[euro]], pre-invasion [[Iraq]] decided it wanted to be paid for its oil in euros instead of US dollars causing OPEC to consider changing its oil exchange currency to euros, although after Iraq's invasion, the interim government reversed this policy, and the subsequent Iraq governments stuck to the US dollar.<ref>[http://www.rferl.org/features/2000/11/01112000160846.asp Iraq: Baghdad Moves To Euro]</ref> Member states Iran<ref>[http://www.globalresearch.ca/index.php?context=viewArticle&code=CLA20060210&articleId=1937 Iran's euro-denominated oil bourse to open in March: US Dollar Crisis on the Horizon<!-- Bot generated title -->]</ref> and Venezuela<ref>[http://www.bloomberg.com/apps/news?pid=20601086&sid=aGBuWpZJ9cPI Bloomberg.com: Latin America<!-- Bot generated title -->]</ref> have undergone similar shifts from the dollar to the Euro.
==Current quotas==
{| class="wikitable"
|+ OPEC Quotas and Production in thousands of barrels per day <ref>[http://www.eia.doe.gov/emeu/steo/pub/3atab.html Quotas] as reported by the [[United States Department of Energy]]</ref>
!Country!!Quota (7/1/05)!!Production (1/07)!!Capacity
|-
!Algeria ||894 ||1,360||1,430
|-
!Angola ||1,900 ||1,700||1,700
|-
!Ecuador ||520||500 ||500
|-
!Iran ||4,110||3,700||3,750
|-
!Iraq || ||1,481||
|-
!Kuwait ||2,247||2,500||2,600
|-
!Libya ||1,500||1,650||1,700
|-
!Nigeria ||2,306||2,250||2,250
|-
!Qatar ||726 ||810 ||850
|-
!Saudi Arabia||10,099||8,800||10,500
|-
!United Arab Emirates||2,444||2,500||2,600
|-
!Venezuela||3,225||2,340||2,450
|-
!Total||31,422||30,451||32,230
|}
===Using quotas to help mitigate global warming===
As fossil fuel consumption produces large amounts of CO<sub>2</sub> and other [[greenhouse gases]], it has been proposed that if OPEC and the [[International Energy Agency|IEA]] established the proper production quota system, [[global warming]] effects could be reduced<ref>, basing the entire planet's energy policy on a hoax.
{{cite web
| title = Climate Control: a proposal for controlling global greenhouse gas emissions
| publisher = Sustento Institute
| url = http://sustento.org.nz/wp-content/uploads/2007/06/climate-control.pdf
| format = PDF
| accessdate = 2007-12-10}}</ref>.
==Membership==
[[Image:Opec Organization of the Petroleum Exporting Countries countries.PNG|thumb|350px|OPEC countries
{{legend|#2d5f2c|Current member states}}
{{legend|#3de639|Former member states}}
]]
The organization now has 12 member states. They are listed below with their affiliation dates. Note that although the effective official language of a 7-nation majority of OPEC member-states is [[Arabic]], OPEC's [[official language]] is [[English language|English]]. OPEC started out with 5 founding countries, but has since then added 9.
;[[Economy of Africa|Africa]]:
*{{ANG}} (January 1, 2007)
*{{LBA}} (December 1962)
*{{NGA}} (July 1971)
*{{ALG}} (1969)
;[[Middle East]]:
*{{IRN}} (September 1960)
*{{IRQ}} (September 1960) (Excluded from OPEC production quotas since 1998)
*{{KUW}} (September, 1960)
*{{QAT}} (December 1961)
*{{SAU}} (September 1960)
*{{UAE}} (November 1967)
;[[South America#Economy|South America]]:
*{{ECU}} (1973–1993, since 2007)<ref>[http://news.xinhuanet.com/english/2007-10/24/content_6931568.htm OPEC accepts Ecuador as active member<!-- Bot generated title -->]</ref>
*{{VEN}} (September 1960)
;Former members:
*{{GAB}} (full member from 1975 to 1995)
*{{IDN}} ( member from December 1962 - May 2008 )
;Prospective members:
*{{BOL}}, {{SUD}} and {{SYR}} have been invited by OPEC to join.<ref>[http://www.kommersant.com/p726525/ OPEC to Step Up by New Members - Kommersant Moscow<!-- Bot generated title -->]</ref>
*{{BRA}} is currently pondering membership due to a sizable oil find in the Atlantic.<ref>[http://money.cnn.com/2008/02/22/news/international/brazil_opec/index.htm Brazil dances with OPEC]</ref>
==See also==
{{EnergyPortal}}
* [[List of Secretaries General of OPEC]]
* [[Chart of exports and production of oil by nation]]
* [[List of oil-producing states]]
* [[APNPP]], a "green" OPEC formed between 15 African countries
* [[Energy crisis]]
* [[1973 energy crisis]]
* [[1979 energy crisis]]
* [[1980s oil glut]]
* [[Ehrlich-Simon bet]]
* [[Hubbert peak theory]]
* [[International Energy Agency]]: a rival body founded during the 1973 crisis by the [[OECD]]
* [[Petrol]]
* [[Power outage]]
* [[Renewable energy]]
* [[Manucher Mirza Farman Farmaian]]
* [[Strategic Petroleum Reserve]]
* [[Petrocurrency]]
* [[Organization of Arab Petroleum Exporting Countries]] ([[OAPEC]])
* [[Price fixing]]
* [[Petrodollar Warfare]]
===Petroleum industry writers/commentators===
*[[Colin Campbell (geologist)|Colin J. Campbell]]
*[[Kenneth S. Deffeyes]]
*[[Daniel Yergin]]
===Articles from the Secretaries General of OPEC===
*[http://www.worldenergysource.com/articles/results.cfm?keyword=opec Find Articles from Dr. Rilwanu Lukman (1999-200), Dr. Alí Rodríguez-Araque (Jan 2001 – 30 Jun 2002), and Adnan Shihab-Eldin (Kuwait), (acting for Al Sabah): (1 Jan 2005 – present)]
===Books covering aspects of the subject===
*''[[The Prize: The Epic Quest for Oil, Money, and Power]]'' (1993), by [[Daniel Yergin]]
*''[[The Politics of Oil-Producer Cooperation]]'' (2001)
*''[[The Coming Oil Crisis]] '' (2004)
*''[[Out of Gas: The End of the Age of Oil]]'' (2004)
*''[[It's The Crude Dude]]'' (2004)
*''[[Confessions of an Economic Hit Man]]'' (2005), by [[John Perkins]]
==Notes==
{{Reflist|2}}
==External links==
* [http://www.opec.org/home/ OPEC official site]
* [http://www.eia.doe.gov/emeu/cabs/opec.html OPEC brief from the U.S. Energy Information Administration]
* [http://www.econlib.org/library/Enc/OPEC.html Concise Encyclopedia of Economics: OPEC]
*[http://mondediplo.com/2006/05/07timeline OPEC Timeline] by Nicolas Sarkis, from ''[[Le Monde diplomatique]]'', May 2006
{{OPEC}}
[[Category:History of the petroleum industry]]
[[Category:International energy organizations]]
[[Category:International trade]]
[[Category:Foreign relations of Austria]]
[[Category:Organization of the Petroleum Exporting Countries| ]]
[[Category:Cartels]]
[[Category:1960 establishments]]
[[Category:Petroleum]]
[[Category:Energy economics]]
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