5. The mission statement for the Organization of Petroleum Exporting Countries s
ID: 1196814 • Letter: 5
Question
5. The mission statement for the Organization of Petroleum Exporting Countries states, “the mission of the Organization of the Petroleum Exporting Countries (OPEC) is to coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry.” Explain why the OPEC members often disagree on how much petroleum each country should produce.
Explanation / Answer
OPEC (Organisation of Petroleum Exporting Countries) is an Organisation of the 13 Member Countries who have similar interests. The formation of OPEC signified the State Control over Resources. Within the territorial limits of the OPEC Nations, the OPEC can impose limitations and the private companies regarding the production of Oil and Petroleum. The major reason behind the formation of OPEC was the exploitation of the resources of the Middle East nations. They were paid very less price for the resources and hence the Nations decided to form an Organisation.
The OPEC Members do not control the price of the Oil and Petroleum in the Market. They only influence the Price of the Oil and Petroleum by controlling the Production. They often disagree on how much petroleum each Country should produce because they have two motives- one, that the Oil Prices at the Global level remain stable and two, they do not incur losses in the Market.
The Mission of the Organisation also clearly states that the Organisation works for the unification of policies of the Member Countries. Also it looks after the stabilization of oil markets.
The oil production by the non-OPEC Countries influence the demand and supply of oil in the market. This influences the Prices and also the Demand and the Supply.
It also looks after the interests of the Producers and the Consumers. Therefore, OPEC controls the Petroleum Industry at a larger extent.
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