OPEC Tactics Raise Production Costs Around The World

12 Sep 2017   OPEC

Efforts by the Organization of Petroleum Exporting Countries (OPEC) have raised the costs of producing oil and gas by roughly $160 billion, transforming the industry, according to a new business study from Duke University, KU Leuven and the University of California in Los Angeles. Thirty-four years of data tracking 13,248 oilfields show how the cartel has raised the financial bar to enter the oil and gas game. “The question people usually ask about OPEC and other cartels is, ‘Does it raise prices for consumers?'” said Duke economist Allan Collard-Wexler, one of the authors. “We found the cartel has also had other, broader effects on the economy.” OPEC’s key strategy since its founding in 1960 has been to control output so that barrel prices stay high. They did this through quotas and other agreements, but the group’s goals have been consistent. The unintended effect of this strategy was to drive […]

Comments are closed.