OPEC at­tacks oil in­dus­try for loss of 100,000 Jobs

Financial Mirror (Cyprus) - - FRONT PAGE -

The Or­gan­i­sa­tion of the Petroleum Ex­port­ing Coun­tries (OPEC) says that un­bri­dled com­pe­ti­tion within the oil in­dus­try has cost 100,000 jobs. How­ever, that fig­ure is not one OPEC has cited based on its own re­search. It comes from a Bloomberg re­port on anal­y­sis from one source Swift World­wide Re­sources, which is a tiny en­ergy in­dus­try re­cruit­ing firm. The car­tel might have picked a more re­li­able source, be­cause its de­ci­sion to choose a sin­gle quote from Bloomberg un­der­mines its en­tire ar­gu­ment.

The OPEC ar­gu­ment about the causes of fall­ing prices favours it over other sources of sup­ply. In the OPEC Bul­letin Com­men­tary March 2105, the group’s lead­ers write: “Yet, when it comes to the sup­ply of petroleum, there is a stub­born will­ing­ness of some non-OPEC pro­duc­ers to adopt a go-italone at­ti­tude, with scant re­gard for the con­se­quences. Th­ese par­ties con­sider pro­duc­ing to the max­i­mum as be­ing the norm. To them, ra­tio­nal­is­ing the devel­op­ment of one’s pre­cious nat­u­ral re­sources in keep­ing with mar­ket de­mands ap­pears to be an alien con­cept.”

OPEC’s multi-decade de facto con­trol of world­wide oil prices does not make it into the anal­y­sis. The car­tel has in the past been ac­cused of set­ting oil prices in a man­ner that helps the trea­suries of its mem­bers. A good ex­am­ple is when oil spiked over $120 in 2008. OPEC did not flood the mar­ket with sup­ply to rapidly bring down those prices, which af­fected the global econ­omy .

OPEC man­age­ment also points out: “How­ever, look­ing at de­vel­op­ments over the past eight months, there is clearly still a lot to do. Whether one is a pro­ducer, con­sumer or in­vest­ing oil ma­jor, plan­ning for the fu­ture be­comes a pre­car­i­ous, al­most im­pos­si­ble task when hav­ing to fac­tor in an oil ref­er­ence price that is prone to wild fluc­tu­a­tions. The price of crude has been halv­ing since the sum­mer of last year. This has been brought about by a com­bi­na­tion of fac­tors led by over­sup­ply and ex­ac­er­bated by the ac­tions of spec­u­la­tors.”

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