OPEC: The Myth and the Reality

On June 4, the Marshall Institute released a new paper by Institute CEO William O’Keefe, formerly Executive Vice President and Chief Operating Officer of the American Petroleum Institute, examining the role of OPEC in contemporary energy policy debates.

 OPEC remains a highly influential symbol of the dangers of import dependence, but facts suggest its actual influence has waned considerably.  As O’Keefe notes:  “OPEC, while organized as a cartel, does not operate as one and for most of its history has been a price taker and not a price maker.  OPEC can influence crude oil prices but does not set them.”

Instead, the real power of OPEC is political, as a tool for interests looking to promote particular policies and programs.
O’Keefe argues: “Since the 1973 embargo, politicians, starting with Richard Nixon and continuing to Barack Obama, have used OPEC to promote industrial policies to develop alternatives to oil.  The opponents to oil imports and to the use of oil as a major energy source have disparate motives and objectives.  In almost all instances, however, OPEC is a Trojan Horse, hiding their real agenda.”

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