WHAT IS LEFT TODAY? ANALYZING OPEC’S INFLUENCE ON THE CRUDE OIL PRICE
KIM J. ZIETLOWABSTRACT. This paper briefly examines whether OPEC is able to keep the crude oil price above long-term marginal extraction costs. A comprehensive analysis of the most important determinants of both the oil price and extraction costs reveals a coherent picture of how those forces interact. We find that in contrast to previous oil price surges, global demand and supply factors as well as broader geopolitical uncertainties have played a much greater role in the recent past. The fading market power of OPEC is related to its instability as a group to act homogeneously. Instead, each country is likely comply with OPEC agreements only as long as they are aligned with own political and economic interests. pp. 61–69
JEL codes: L72; O13; P28; Q27; Q32
Keywords: OPEC; oil price determinants; extraction costs; Hotelling rule; resource pragmatism and nationalism; global demand
How to cite: Zietlow, Kim J. (2015), “What Is Left Today? Analyzing OPEC’s Influence on the Crude Oil Price,” Journal of Self-Governance and Management Economics 3(4): 61–69.
Received 21 February 2015 • Received in revised form 8 October 2015
Accepted 8 October 2015 • Available online 15 October 2015