Term Paper: OPEC-Cartel

Sample Term Paper

Words 1,400

This term paper discusses OPEC-Cartel. Because of the OPEC-led oil shock, all aspects of the economies of Western nations had become more energy efficient – from cars to factories to heaters in home.

Because of the OPEC-led oil shock, all aspects of the economies of Western nations had become more energy efficient – from cars to factories to heaters in home. This combined with the fact that world-wide oil reserves during the Persian Gulf War were at significantly higher levels  than had been the case during the early 1970s dampened the effect of the war on oil prices.

Oil prices also fell rather than rising after the beginning of the First Gulf War war in at least some large part because OPEC’s power over world oil supply had been significantly decreased. In other words, in some sense what happened to the Kuwaiti oil fields no longer mattered.

In all, the current outlook is for a slow growth in oil demand and a more rapid growth in available supplies, which will tend to depress prices, at least when measured in constant (inflation-corrected) dollars. The Persian Gulf War gave a further boost to those forces which restrain demand and increase supplies. Prices will be even more depressed when Kuwait and Iraq fully reenter the market. Notwithstanding price fluctuations arising from weather, accidents, wars, revolutions and the like, the underlying trends point to lower prices. As a result, OPEC’s power to control prices will be even weaker than in the past.

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