OPEC and Their Control on Oil Prices

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OPEC and Their Control on Oil Prices

James R. Hill

Axia College of University of Phoenix

OPEC and Their Control on Oil Prices

The sound of the ringing bell signals that the stock market is open for business. Shouting voices can be heard by the traders trying to buy or sell stocks on the market. For some, it will be a day of financial gains, and for others it will be a day filled with losses. There are many economic issues that are determined in the rise and fall of the American stock market; one of those issues is the price of oil. On many levels, the price of oil is dictated by groups of governments that have a stake in the success of the Organization for Petroleum Exporting Countries (OPEC). American consumers deserve to know how OPEC and its member countries influence the price of oil around the world.

OPEC controls the price of oil around the world, and a majority of the world's oil reserves, producing 29.9% of America's imported oil ("How dependent", 2008). The Organization for Petroleum Exporting Countries, referred to as OPEC, was created in Baghdad, Iraq, in September of 1960. Baghdad is the location that was chosen for the original OPEC members, Kuwait, Saudi Arabia, Iraq, Iran, and Venezuela, to come together and discuss oil prices. Between 1961 and 2007, OPEC increased its membership when nine other countries joined their forces. Those countries, Angola, Indonesia, Socialists People Libyan Arab Jamahiriya, Qatar, Nigeria, Algeria, United Arab Emirates, Gabon, and Ecuador reportedly joined OPEC to help stabilize the oil market. OPEC's Headquarters were originally located in Geneva, Switzerland but in 1965, they were relocated to Vienna, Austria (Brief History, 2008).

In 1973, the countries of Egypt and...