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Essay / Research Paper Abstract
This 8 page paper discuses the impact of OPEC's decisions on the American economy. The essay begins by identifying the member nations, the purposes of OPEC and its world market share. The author then goes on to explain and demonstrate how oil price increases have had a negative effect on the U.S. economy, in fact, leading to recessions. Bibliography lists 6 sources.
Page Count:
8 pages (~225 words per page)
File: MM12_PGopec.rtf
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Unformatted sample text from the term paper:
that controls oil prices and regulates production primarily by setting production quotas for each of its member states (Wikipedia, 2004). OPEC began with five countries as members, it
now has eleven. The founding members are Iran, Iraq, Kuwait, Saudi Arabia and Venezuela; added since then are Algeria, Libya, Nigeria, Qatar, United Arab Emirates and Indonesia (Wikipedia, 2004). Many
people think only Middle East states belong to OPEC but as this list reveals, that is not true. Together, the member countries "hold about 75% of the worlds oil reserves,
and supply about 40% of the worlds oil" (Wikipedia, 2004). One interesting fact is that sales of oil in the world are dominated by U.S. dollars (Wikipedia, 2004). Thus, currency
exchange rate plays a significant role in OPECs decisions about prices and on the amount of oil they will produce (Wikipedia, 2004). One reason offered for this cartels success
with spiking prices is the degree of tolerance certain states have for other states to cheat (Wikipedia, 2004). For instance, of the member states, Saudi Arabia has the most flexibility
in terms of production and capacity and because of this they allow other member states to exceed their quotas and cut their own production (Wikipedia, 2004). The end result is
that oil prices increase (Wikipedia, 2004). Where else is oil produced? The largest six oil producers who are not members of OPEC are Oman, Norway, Russia, the United States, Mexico,
and Canada (Wikipedia, 2004). There is some discrepancy on the amount of market share OPEC holds. Mouawad reports that once OPEC held a 50 percent world market but it now
holds a 33 percent world share (2004). Whatever the actual figure it, it is substantial enough to play havoc with the economy of any nation that gets a lot of
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