The Organization of Petroleum Exporting Countries (OPEC) - PowerPoint PPT Presentation

Loading...

PPT – The Organization of Petroleum Exporting Countries (OPEC) PowerPoint presentation | free to download - id: 3b1c3b-OTJiY



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

The Organization of Petroleum Exporting Countries (OPEC)

Description:

The Organization of Petroleum Exporting Countries (OPEC) Maria Lorusso March 25, 2002 Petroleum Market in America Prior to OPEC The Standard Oil Monopoly First major ... – PowerPoint PPT presentation

Number of Views:1459
Avg rating:3.0/5.0
Slides: 19
Provided by: www41Home
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: The Organization of Petroleum Exporting Countries (OPEC)


1
The Organization of Petroleum Exporting
Countries(OPEC)
  • Maria Lorusso
  • March 25, 2002

2
Petroleum Market in America Prior to OPEC
  • The Standard Oil Monopoly
  • First major illustration of how competition leads
    to cooperation among groups in an industry
  • Standard held 10 percent of refining interests in
    Cleveland, but 26 other refineries held interests
    (competition drives down prices)
  • 1872 Standard (Rockefeller) organized South
    Improvement Co. (agreement with railroads to
    implement rebates)
  • Within 3 months of formation of S.I.C. 21/26
    refiners joined

3
World Petroleum Market Prior to OPEC
  • Market Demand Prorationing
  • Created by state governments in US for purpose of
    limiting production
  • Limited output and maintained prices 1935-1970
  • International Corporate Cartel
  • Red Line Agreement 1914
  • Middle Eastern reserves developed through
    Turkish Petroleum Company
  • As-Is Agreement 1928
  • divided oil sale, eventually between the Seven
    Sisters
  • Profit Sharing in Venezuela

4
Formation of OPEC
  • 1959 majors reduce posted prices by 10 percent
  • First Arab Petroleum Congress, Cairo April 1959
  • Aug. 1960 majors reduce posted prices again
  • First meeting of OPEC September 9-14, 1960 in
    Baghdad, Iraq

5
OPEC Member Countries
  • Founding Members Saudi Arabia, Iran, Kuwait,
    Iraq, and Venezuela
  • Full Members Qatar, Libya, Indonesia, United
    Arab Emirates, Algeria, and Nigeria
  • Founding Members have veto power over admission
    of new members (otherwise all countries have
    equal rights)
  • Any country with substantial exports and same
    petroleum interests are eligible to join

6
OPECs Principle Objectives
  • Coordinate and unify oil policies of Member
    Countries
  • Determine best means of safeguarding individual
    and collective interests
  • Stabilize prices in international oil markets
  • Provide efficient and economic supply of
    petroleum to consuming nations
  • Obtain a fair return on capital to those
    investing in oil industry

7
How OPEC Functions
  • The OPEC Conference supreme authority, meets
    generally in March and September
  • Heads of Delegation official representatives of
    each Member Country
  • Board of Governors directs management, draws up
    budget
  • Secretariat carries out executive functions,
    consists of Secretary General and Research
    Division

8
Brief History of OPEC
  • 1960s Five Founding Members seek to assert
    rights in oil market dominated by Seven Sisters,
    Secretariat moved from Geneva to Vienna 1965
  • 1970s Rose to international prominence, 2 oil
    pricing crises

9
History Contd
  • 1980s Prices peaked in beg., 3rd oil pricing
    crisis 1986, environmental issues appear on
    agenda
  • 1990s 4th pricing crisis averted, stability
    until 1998, then collapse in wake of downturn in
    South East Asia

10
OPEC as a Cartel
  • Confederation of countries which have reached an
    accord with respect to prices, market shares and
    other important matters
  • Enhance wealth through fixing prices, limiting
    output
  • Monopoly most extreme form (all participants in
    an industry merge)

11
Incentive Both For and Against Collusion
12
Oil
  • At the end of 1999, world proven crude oil
    reserves 1,042,536 million barrels
  • OPEC Member Countries have 811,526 million
    barrels or 77.8 percent
  • Uses refined, kerosene, gasoline, asphalt

13
Daily Oil ConsumptionOPECs World Energy Model
(OWEM)
14
Oil Reserves and Oil Production
15
High and Low Oil Prices
  • High Oil Prices
  • Shortage of oil supplies
  • Sentiment if traders think there will be a
    shortage
  • Taxes greatly effect price of oil products
  • Low Oil Prices
  • Imbalance too much supply/too little demand
  • Non-OPEC producers supply as much as they can

16
OPECs Current Production Ceiling
17
OPEC and the Oil Market
  • OPEC does not control the oil market, but it does
    have a strong influence on the market
  • OPEC Member Countries produce 41percent of the
    worlds crude oil

18
Fund for International Development
  • Formed in 1976 to assist Non-OPEC Countries with
    developing their economies
  • Committed to loans and grants that total more
    than 4 billion
  • Active in Asia, Africa, Latin America, Middle
    East, and the Caribbean
  • Encourages cooperation in the oil market
About PowerShow.com