Riddle me this; how, in a world of competition and trade rules, does OPEC exist? I’ve been asking this question for years, and never gotten a proper answer. My faith in free trade may be shaken.
It reminds me of how, as a teenager, I spent several years asking catechism teachers ‘if I am forgiven my sins in confession, then what is there to talk about on judgment day?’. Result; I’m a practicing Catholic who hasn’t been to confession since I was 17.
But seriously, do WTO rules bend the space-time continuum to let OPEC members continue their cartel-building, export-controlling ways? How is OPEC accommodated in the world of sort-of free trade? I’m not looking for the realpolitik answer. That’s pretty obvious. But what is the legal and institutional answer to this question?
Yesterday, Algeria’s energy minister and current OPEC president said oil may hit $200 a barrel and there’s little OPEC can do about it. As if oil prices are as immutable as the weather. He went on to say increasing output wouldn’t lower prices currently high prices because these are the result of the weak dollar and global instability. Which is some equally bizarre reasoning. Even if you accept situation X is caused by variables Y and Z, doesn’t mean that it can’t be changed by adjusting some other variable. (Whether or not there is a duty of those in control of that variable to adjust it is another question – though the assertion that Saudi Arabia has cut production by 2 million barrels a day in the last 3 years undercuts OPEC’s disinterest claim.)
What’s going on at the level in between OPEC’s realpolitik and disingenuous P.R. claims? Is there such a level of legal or institutional discourse with other countries or institutions? I feel there’s a stratum of interaction missing in the way OPEC is reported on in the news. In the middle bit between its externally focused bully power and its self-serving rhetoric, are there rules that constrain OPEC in its outside relations? (Clearly, internal struggles between producers generate their own constraints and coordination problems – I’m thinking of Robert Bates’ fascinating work on coffee producers.) How does OPEC get along…?