I reworked this reply as I misunderstood what ChantCD wrote.
But when you have SO MANY countries involved, each of which could get independently rich if they just pumped a bit more -- but for some reason they don't.
OPEC countries do set limits (quotas) on their productions to keep the prices to a certain level that garanties profitability for them by both having the prices high enough, and at the same time, not to high as to cause economic slowdown (which in turn decrease demand and profits). Non-OPEC countries are not bound by these quotas and they can like you say, produce as they please.
However, the majority of the Oil on the market is produced by OPEC countries.
A few tycoons in America getting together and "fixing prices" is one thing. But hundreds of companies and state-owned oil companies? Many countries involved are political enemies. Why would they cooperate thus?
I did not write at all about price fixing, but rather on a source for bottleneck in supply different then crude oil extraction. I believe (with caution as I am on shaky grounds) that the current levels of productions are not currently limited by the capacity of "extract crude oil" but rather, in the capacity of refining it into a marketable good. It means that the investments in refinery infrastructures necessary to keep up with a growing demand has not been done. If this is not true, fine, I may be wrong on this.
Vandaler, you're always putting the damper on conspiracy talk by saying "the more people involved, the greater the chance someone fails/spills the beans" -- well, in this case, it's VERY likely that if it were just price fixing, then Saudi Arabia OR Venezuela OR Nigeria (etc) would unilaterally increase production by 50% so the leaders of the country could have even more wealth (and power).
The countries you mention abide by quotas set by OPEC. They view it in their best interest that they all restrain themselves in producing in a profitable yet predictable manner. And you are right, if there was a conspiracy it would be virtully impossible to dissimulate.
What you view as improbable, (abiding by quotas when they can produce more etc..) is by virtue of having a seat at OPEC. If they behave in such a way, it's because they view it in their interests to unite into having a seat at the table when production levels are set.
If a country did not want to be restrained by quotas, it would simply remove itself from OPEC.Last Edit:
Setting quotas makes sense. Oil barrels are finite in numbers and will only be sold once. It would be short-sighted for countries to rush and extract the oil as fast as they may to sell it at discount prices since the market would be flooded.
Actually, that's just the tip of the iceberg. I've heard all kinds of reports about Saudi Arabian oil fields -- the big ones -- peaking. Then there's Mexico's Cantarell which is certainly in decline. All the big fields are peaking, and it's getting impossible to replace them with dozens of much smaller fields.
All the "low hanging fruit" has been picked, and now we're scraping the bottom of the barrel.
Maybe, maybe not. Surely your more of a fatalist, while I am cautiously optimistic, so we tend to not pay attention to the same articles or sources of information.http://www.opec.org/aboutus/functions/functions.htm