OPEC and Industrialized Market Nations A Study

A Study of Neo-Imperialist Relations and Sibling Rivalries

The Organization of Petroleum Exporting Countries (OPEC) is often referred to as a cartel. It is, however, better described as a loosely cooperating oligopoly of heterogeneous nations, whose compact with one another is based on two key factors. The first is, of course, the fact that all the nations of OPEC have economies based primarily if not exclusively on the production of a politicized commodity, namely petroleum. The second commonality is that all the member-states, like the commodity they share, are found in relatively non-industrialized parts of the world or, to use the political terms of the just-passed Cold War era, the (Third World.(1 The latter commonality has less to do with the relations among the OPEC countries themselves than it does with their relationship as a group and individually to the industrialized nations, OPEC(s primary customers. Among themselves, OPEC nations, most notably in the Middle East, are often at odds not only in connection with oil production, but also ideologically and politically. However, the existing economic and political global relationships inside and outside the cartel suggest that OPEC(s real significance on the world scene is understood, perhaps only implicitly, in relation to the nations of the so-called First World, especially the United States. In the narrower terms of the international oil market, OPEC(s influence

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wal of open competition between erstwhile political allies and economic rivals and the probable intensification of class struggle due to a widening gap between rich and poor worldwide will likely eclipse OPEC(s role on the international scene.9 However, it should be clear that OPEC(s role has been a balancing act between the economic and political interests of the ruling elites in the industrialized nations and the related but discrete interests of OPEC(s rulers.10 Even in theoretical economic terms, OPEC(s role in the oil market has always been a balancing act between over- and underproduction, between setting prices too high or too low. With prices too high or too little production, it becomes viable for non-OPEC competitors to pump more expensive oil, implement conservation, or to invest in alternative energy production; too low with overproduction, profits for OPEC drop. In economic practice, the balancing act is more complicated in a number of ways. First, regardless of what OPEC decides and does (which are often different), there is a major difference between the cost of extracting oil and getting it to the consumer and the price paid by the consumer. The mark-up is sometimes in excess of 3,000 percent.11 That profit
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Approximate Word count = 3556
Approximate Pages = 14 (250 words per page)