Abstract
Since 1973, OPEC has been less and less successful in reconciling the individual and collective interests of the member states. Differences in oil reserves, production capacity, dependence on oil income and the degree of vertical integration have brought conflicting interests to light concerning price and production levels. In the last years, OPEC has been unable to strike dependable agreements on production among its member states; agreements were for public consumption only. OPEC has become a weak market regulator, and quite a few of its member states are in such severe economic peril that they cannot invest in new oil production capacities. The buyers' market has made for a weak oil price in recent years and oil income levels have declined accordingly. For the economically weaker OPEC countries, income has declined so much that they are now worried as to how to finance the new round of investment needed in their oil industries. Allowing foreign direct investment in industries is becoming more and more of an alternative option. However, attracting these foreign investments will be more feasible if agreements to limit production are abandoned. The consequence of thus reducing state control over the industry in the member states will further weaken the position of OPEC as a market regulator.
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