Oil Prices, Opec and the Poor Oil Consuming Countries

Abstract

In 1950, the year O.P.E.C. (Organisation of Petroleum Exporting Countries) was formed, the world oil industry was dominated by a group of seven oligopolistic major international oil companies, who were collectively known as ‘majors’.¹ The latter owned 84% of world crude oil production, 74% of refining capacity and 70% of marketing activities² outside the United States and the Communist countries. They produced oil, researched on oil exploration, refined, marketed and transported oil; they knew everything about oil and did everything there was to do to run the industry. The seven majors also fixed the oil prices and decided on who was to sell oil, how much, and to whom; they were the intermediaries through whom countries producing and consuming oil transacted their business. The majors were the oil industry, no country or government in the less developed parts of the world, oil producers or consumers alike, could risk antagonising these vast corporate entities.