Publications: Notes at the Margin

OPEC Has No Power. Why Is That So Hard to Understand? (December 14, 2015)


The oil market has entered a new phase, one not yet well understood by numerous observers. Many individuals, competent or not, assert that OPEC should take action now. The point they fail to understand is that matters are out of OPEC’s hands. The world has too many producers and no authority exists to enforce production discipline. A producing country may want to earn more for its exports but in no way can one such country increase its income by cutting output. Markets have changed.


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