However, the energy crisis of the 1970s was a headline crisis, one that never actually transpired. This is because there are always unused production reserves and capacity. The long gasoline lines and higher prices for fuel during the 1970s were real, but they came more from U.S. price controls and not Arabs in the Persian Gulf. The higher prices actually set off a wave of conservation. Oil consumption has only grown 1% worldwide in the three decades since 1970 and OPEC exports have never regained their 1972 peak, but a large part of the difficulty with OPEC and international oil supply is that OPEC interferes with the market “The price of oil is unstable because production is not allowed to keep adapting to demand. Instead of individuals each making decisions on how much to produce, OPEC members must decide as a group. They must reach a consensus: Who produces how much? OPEC must first do what nobody does well: forecast market demand, to decide how much to produce in total.”
On one hand, OPEC works well. Looking at the price of fuel from 1970 and the price now is one way of knowing this, but so are the constant restrictions on low-cost production instituted by the international oil cartel. The 1990s, on the other hand, have seen escalation of conflict and jockeying for power among OPEC members as well as with other governments and international agencies. There has always been infighting and disagreement among OPEC members. One of the reasons for this is that the oil ministers often overestimate or underestimate market demand for fuel. When they overestimate they need to lower production to keep prices high. However, they must divide up this lower production to the satisfaction of the members. This causes problems for OPEC members and the economies of their respective nations, just as it does for non-OPEC member nations “To take the most recent example: In 1996-1999, there was no failure of demand. Global oil...