Editorial Comment ///

OPEC rules? I often hear on television, radio, at lunches, speeches, as well as read in the newspaper, the litany of reasons for oil prices being what they are. It's because the US is topping off its Strategic Petroleum Reserve; or it's due to investor psychology over fears of civil war in Iraq; or that Saddam will set fire to his wells; or because Hubbert was right after all; or Chinese demand; or high prices will hurt economies, lessen demand and lead to lower prices; or Venezuelan President Ugo Chavez dropped the "H" from his name. I could go on for some time. It's astounding how often OPEC is mentioned only in passing, or not at all. The simple, unexciting truth is: OPEC controls oil prices. What makes this possible, of course, is the extraordinarily unequal distribution of oil. OPEC produces about 40% of the world's oil and has roughly 70% of its reserves.

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