What is the Organization of the Petroleum Exporting Countries?

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The Organization of the Petroleum Exporting Countries (OPEC) is an international cartel that controls a large portion of the world oil trade. OPEC includes 12 countries; Kuwait, Algeria, Ecuador, Iran, Angola, Iraq, Libya, Saudi Arabia, Nigeria, Qatar, Venezuela and the United Arab Emirates. The organization has occasionally been the subject of controversy, as its control over oil-flow is so great. This influence has lessened in recent years for a number of reasons.

Founded in 1960, the Organization of the Petroleum Exporting Countries quickly became one of the most influential organizations in the world. While several of the OPEC founding countries had discussed the possibility of forming a collective, it wasn’t until 1960 that it became necessary. A law passed by then American President Dwight Eisenhower put limits on oil imports from non-North American sources. As the United States was one of the largest oil importers, this created a sharp downturn in oil profits.

The original five members of the Organization of the Petroleum Exporting Countries began recruiting new members to solidify their hold on the oil trade. Over the course of the next 15 years, OPEC recruited eight more countries and held nearly all of the known world oil reserves. Certain countries, like the United Kingdom, were intentionally left out of the organization due to their ties with colonial activities.


The goal of the Organization of the Petroleum Exporting Countries is to control the production and availability of oil. The group does this by strictly controlling the amount of oil pumped from member countries' oil fields and setting restrictions on price and availability. During the height of its power, the group maintained a slow increase in cost, but a stable overall price. At times, such as during the 1973 oil embargo or the years of over-production in the early 80s, oil prices would fluctuate, but would go back to their previous levels soon after.

The level of control that the Organization of the Petroleum Exporting Countries has over oil prices makes many non-members uncomfortable. For several decades, OPEC was able to influence prices in every industrialized country. Simply by making gasoline more expensive, they could make non-related products more expensive through increased shipping costs. This had ramifications on everything from inflation rates to housing costs.

Even though OPEC still controls a vast amount of the world oil reserves, their overall influence is less than what it once was. Due to increased demand, most member countries are producing oil nearly as fast as their infrastructure allows, which nullifies the usefulness of production quotas. In addition, several new oil deposits have been located in non-member countries. Since the oil produced by these sources is not subject to OPEC's regulations, international oil sales aren’t as heavily influenced by their price-fixing.


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Post 2

@Illinifan - I'm not an expert on the subject, but I'm pretty sure that Gabon and Indonesia both used to be members. Indonesia dropped out because of the increased demand for oil in their own country, but I'm not sure why Gabon left.

Post 1

Thanks for the overview -- but can anybody tell me a little more about the history of OPEC, for instance, some of he former members? I am writing a paper about this for my poli-sci class and could use all the information I can get! If you could tell me about some former member countries and why they dropped out that would be fantastic.

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