English Deutsch Français Italiano Español Português 繁體中文 Bahasa Indonesia Tiếng Việt ภาษาไทย
All categories

Question in more detail: If there is an Organization for Petroleum Exporting Countries (OPEC) that dictates the supply of oil, could there be an Organization for Petroleum Importing Countries (OPIC) that dictates the demand for oil?

Basically, the reason why OPEC had much power before was because of the fact that oil-importing countries were fragmented and they have less buying power. For example, given the wanning influence of OPEC, could oil-importing countries unite and dictate where to buy oil and at what quantity?

What is the implication of this type of system, and could it exist and stay in power just like OPEC?

Some question to work out the economist in you...

2007-03-30 15:41:07 · 3 answers · asked by windsinger 2 in Social Science Economics

3 answers

It would be difficult. When it comes to a scarce resource, the people holding the supply really have the power. Especially when it is such an important resource (our US economy is absolutely petroleum-dependent).

It's (comparitively) easier to create an alliance among a small number of member countries as in the case of OPEC. All the same, there is an incentive to "cheat" or work outside of their cartel's framework. And, even in such a small alliance like OPEC, it happens now and again.

An alliance among all of the oil importing nations? That's going to take some complex logistics. And again, there is an incentive to work outside of the alliance to improve a country's self-interests. The benefits of working outside a fictitional "OPIC" alliance are too large--it's difficult to imagine this ever becoming feasible.

Individual nations will act to better their own interests. While collective action might provide better outcomes for all, there is an ever-present incentive to cheat the system.

Furthermore, if oil demanders have some sort of "control" or power as a result of collective action, will they actually engage in activities to improve society? If oil prices are forced down, consumption will increase. The supply of oil is fixed (in the long-term). Thus putting an upward pressure on oil prices. (More importantly, creating an externality--carbon-based pollution and lack of development in alternate energies).

As it stands, "OPIC" is doubtful. Especially as many nations are trending backwards towards nationalist policies.

In an ideal world, OPEC is eliminated through free trade and competition. No need for a competing "OPIC".

Sorry for rambling; hopefully this gave you something to think about.

2007-03-30 18:08:02 · answer #1 · answered by Wade R 3 · 0 0

Create some sort of Oligopsony. Yeah good luck with that.

The thing that OPEC does is get together and set sales quotas to limit the amount of Oil available for sale and increase the price. They have to make sure that any one of them doesn't get eager and decide they are going to sell more because the price is better - that's what the individuals will want to do.

Now, you want to form a group of buyers would HAVE to say we need less oil - way less than they are selling. So, even if you could get your country to cut it's oil use less than the OPEC output to switch the tables, if the price fell, would your country continue to not use oil? The answer is no, because you wont reduce oil use to begin with. You wont drive your SUV to the junkyard and leave it there and take an electric bus.

2007-03-31 01:09:40 · answer #2 · answered by JuanB 7 · 0 0

A good idea, but the economic demand seems to set the buying power of it. There's no real way to control all the nations of the world buying power. Its a simple plan of supply and demand of product. Whoever controls the supply, can limit the product and increase or decrease demand.

The only other ideas I might offer is the research into alternative fuels, providing secondary means of fuel, to decrease the overall demand on oil. Varying the options allows consumers to decrease the monopoly oil controls in energy.

2007-03-31 01:04:43 · answer #3 · answered by fiexie04 1 · 0 0

fedest.com, questions and answers