While much of the world relies upon oil, it is difficult to categorize within which blog section the topic of OPEC belongs – is it politics, or environment, or community, or other? For this purpose, with OPEC being in the news recently with the United States’ ever-increasing oil production (and recent comments regarding politicizing from both regions), the question of OPEC, its associated significance, and its history, present, and future as seen today, is analyzed.


OPEC, the Organization of the Petroleum Exporting Countries, was established in Baghdad, Iraq, in September, 1960. With a stated mission of stabilizing the oil markets for producers and consumers, 12 members as of 2014 exist: Kuwait, Saudi Arabia, UAE, Qatar, Iran, Iraq, Libya, Nigeria, Algeria, Angola, Ecuador, and Venezuela. Operating on a “one member, one vote” principle meeting semiannually (March, September), it formulates items such as crude oil prices, with different petroleum blends taken into account with names such as Arab Light, Es Sider, Iran Heavy, etc.; among these, North Sea Brent crude oil is what half global oil trade is involved with, along with two-thirds of the world’s internationally traded crude oil supplies (with West Texas Intermediate being another).

The origins of OPEC were founded on a gentlemen’s agreement of sorts, as well as purported “absentee landlordism” with resentment towards those able to drastically cut oil prices with the other producers left to react.

With the Oil Embargo of 1973, OPEC raised prices (presumably due to political reasons of U.S. support of certain other interests) – left with little alternative than reducing consumption (hence, reducing demand, hoping for price shift lower), the reality was a recession. Internal conflict was blatantly noted in 1975 with hostage-taking of key OPEC officials by a Venezuelan terrorist, which resolved.


The United States (per New York Times, www.nytimes.com) has noted an increase of 70% in oil production since 2008, with reduction of 50% in OPEC import. The U.S. and Canada equaled OPEC production of approximately 1.7 million barrels per day in 2014. Using simple rules of supply-demand economics, the relative oversupply of oil has resulted in falling prices, with some efforts of OPEC to “allow the market to correct itself,” with the idea that U.S. shale production would fall. This idea of falling prices has reached $43 in 2015 from an already-fallen $71 in 2014.

An interesting decision (and one that supports placing this OPEC topic in the “politics” section is the 1979 U.S. District Court decision that OPEC was granted “sovereign immunity” for governmental rather than commercial acts, effectively placing OPEC beyond competition law and specifically price-fixing.

New examples of oil and gas extraction are to be covered elsewhere in a different blog, under www.RavishOnTechnology.com.


In 2015, the Wall Street Journal (www.wsj.com) noted that the oil production diagram of the U.S. vs. OPEC was becoming increasingly divergent, with the more recent times showing the U.S. with increasingly greater production. Newer technologies such as fracking, which allow the ability to extract oil from areas intermingled with other materials such as dirt, have afforded new access to oil not previously recoverable.

OPEC must strategize from the vantage point of increased-supply conditions, with not quite a commoditization, but certainly a change from the once-tighter oligopoly which it held.

If the simple principles of economics are to be followed, there may be three chief concerns for OPEC: (1) the law of supply-demand leading to price reduction and subsequent plateau, depending upon relative supply and demand; (2) the interference of alternative sources of fuel, e.g. electric cars, solar panel-driven functions which substitute for gasoline; (3) the interesting interplay between a regulated economy such as that of the United States that doesn’t allow price-fixing and has competition laws now having to compete on the same playing field as OPEC and others, albeit the latter two don’t have the same exposure to such laws due to international sovereign immunity. However, it is likely that the “invisible hand” of economics in a non-price-fixed economy which allows monopoly will result in a lower price to fulfill demand – as we are seeing in the (perhaps?) plateaued oil prices of oil at $40 per barrel. There has been much to consider in recent special (non-routine) meetings at OPEC headquarters at Vienna, Austria, such as that held June 5, 2015, where as of this meeting, “production levels were to be maintained.”

(Information above has been acquired from numerous sources, including www.opec.org, www.nytimes.com, www.wsj.com, www.wikipedia.org, and www.cnbc.com, among others)