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Oil Cartels

 

Why
did I choose this topic?

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The primary reason I selected this topic is because it interests me
to know more and more about oil exporting countries in the world. Since this
topic interests me, I thought researching issues related to oil cartels would
be stimulating. Specifically, I wanted to learn about how oil cartels like OPEC
which is the largest oil cartel in the world is operating, and what steps are
being taken to control oil production.

I thought it is quite easy to gather information about oil cartels
and there is many websites government and non-government websites which we can
find the related data to this topic.

 

 

Origin & nature

A cartel is an organization created from a formal agreement between
a group of producers of a good or service to regulate supply in an effort to
regulate or manipulate prices. In other words, a cartel is a collection of
otherwise independent businesses or countries that act together as if they were
a single producer and thus are able to fix prices for the goods they produce
and the services they render without competition.

The term cartel, can be defined as “a group of parties,
factions, or nations united in a common cause; a bloc” as well as “a
combination of independent business organizations formed to regulate
production, pricing, and marketing of goods by the members.” History shows
many examples of successful and not so successful cartels – they have been
around for hundreds of years. The steel industry and diamond industries are
some examples. However, one of the most powerful modern cartels is the
Organization of the Petroleum Exporting Countries more commonly referred to as
OPEC.

Oil and gas are considered among the world’s most important
resources. The oil and gas industry plays a critical role in driving the global
economy. Petroleum itself is used for numerous products, in addition to serving
as the world’s primary fuel source. The processes and systems involved in producing
and distributing oil and gas are highly complex, capital-intensive and require
state-of-the-art technology. This issue of the Business & Economics
Research Advisor provides a comprehensive overview and guide to resources on
this vast and important industry.

Prior to the rise of OPEC, the oil industry was dominated by the
large oil companies often known as the Seven Sisters that possessed the
technology and skills for exploration and production that the countries lacked.
OPEC was born, to some extent, to reduce the influence the oil multinationals.

As
Skeet suggests in his book, “The governments of the oil producing
countries in varying degree, but in all cases with increasing fervor, viewed
the systems under which the companies operated as an outdated example of
imperialist domination.” In fact, one of the first things written in the
1st OPEC Conference Resolution in Baghdad states, “Members can no longer
remain indifferent to the attitude heretofore adopted by the Oil Companies in
effecting price modifications.

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