OPEC: Floating Supply for a Balanced Stable Market, Part I

摘要

OPEC was formed as a joint action between five countries inrn1960 in Baghdad to set a fair price for crude oil in the worldrnmarket. Today, eleven members account for 40% of world oilrnproduction and 65-70% of proven oil reserves.rnOPEC members regularly discuss oil prices and set crude oilrnproduction quotas. OPEC revenue has grown over the lastrnyear, but instability in revenue has been repeatedly related torngeopolitical crises, instability in one or more OPEC memberrnstates, or lower world demand. OPEC pricing is set based onrnan arithmetic average of a basket of seven crude types; inrnpractice, this is unhealthy for the crude price and always failsrnto follow the market. Furthermore, there is one trillion barrelsrnof crude worldwide awaiting cost effective technology tornmake it ready for production. This would possibly results inrnbetter price stability in the crude oil market.rnOPEC price, based on basket trading, was set for 10 -20 daysrnas $22.0 – 28.0 for adjustment. This has not been forced in thernmarket since it was accounted.rnUntil the European Union created a unified currency, the USrndollar has been (and still is) the dominant currency since 1945rnand handles over 70% of world official exchange reserves.rnWill this state of affairs change? Will the oil (and possiblyrngas) price become stable whilst subject to rules other than thatrnof supply and demand? Can the Euro replace the Dollar in therntrading of crude oil? Would it be better for OPEC members tornbase production quotas on regulations other than thoserncurrently used?rnMost forecasts of prices and quotas face difficulties in findingrnrules to follow. This paper discusses ways and means forrnbetter crude market stability.