The Role Of An Oil Cartel In Price Manipulation

By Dawn Bradford

Agreements among key players in the oil supply on market strategies for self gain are the starting point of an oil cartel. It can be an affair involving government to enforce their plans in public and shield them. Others can be a private deal, being subject to legal scrutiny and often riding on a chain of corruption.

Perhaps the most conspicuous monopolist is the OPEC. Its membership consists of most oil heavyweights in the Middle East and many interested far flung producers. They also put much effort in convincing eligible non members to hop into their ride to reap the benefits of gaining more influence on their gains from sale of their resource.

Oil importing states are the most susceptible to the vices of cartels. The majority of their economic activities are run by fuel consuming equipment. Since cartel manipulation creates volatility in gas charges, their economic stability is left at the mercy of these economic villains.

International monopolists are to blame for unprecedented hikes in local fuel prices. If they desire to raise the price of crude, all they do is reduce production at the oil mines. As an economic rule, the less the supply the higher the cost of the commodity.

These associations also exist in domestic trade and command considerable influence on gas charges. They can still cause high domestic price even in periods of low crude cost at international market. They usually create artificial shortages to justify the exorbitant prices at their outlets.

Many non producing countries are victims of oil cartel marketing strategies. This pushes for the need to establish measures to safeguard their economic stability from their influence. Applying advanced technology in their automotive industry could be a very effective means of cutting their fuel requirements. They could also fund institutions to research on the possibilities of employing renewable energy sources.

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