4 - THE RATIONALE FOR OPEC

Abstract

This chapter highlights rationales behind OPEC's oil price actions. The Organization of the Petroleum Exporting Countries (OPEC) was created in the year 1960 in direct response to the price policies of the transnational oil companies and to protect the legitimate interests of its member countries. The chapter also highlights that the real value of more rational and more harmonious OPEC policies lies in the fact that they will lead to more international cooperation in political relations and in economic advancement, and more sustainable changes in the energy sector. This in return is conducive to results mutually beneficial to the producers and the consumers. The oil importing developing countries have benefited substantially from large-scale grants and other development assistance from the OPEC countries. It is suggested that a proper balance between the political and economic pressures will ensure not merely the survival of OPEC and the world economic system upon which it must inevitably depend, but also an enhanced place in the world community of nations for OPEC members.