Making the best of a low price

摘要

An effective cartel requires three things: discipline, a dominant market position and barriers to entry. The Organisation of the Petroleum Exporting Countries lacks all three. Its members cheat on their quotas. It supplies only 30% of the world's oil-too little to exercise control. New producers abound. That is the backdrop to opec's decision last month to make no attempt to bolster the oil price, sending it below $70 a barrel-a near 40% drop since June. Saudi Arabia, its most influential member, could have sent the price up single-handedly by deciding to pump less. Unlike cash-strapped oil exporters such as Venezuela, the kingdom can afford self-denial: it has savings of $900 billion.