why oil-buying countries did not form a counter-cartel to OPEC+?
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With what bargaining power? They’d have to buy oil from the other side regardless. Modern society just doesn’t work without oil.
With what bargaining power? They’d have to buy oil from the other side regardless. Modern society just doesn’t work without oil.
The answer is that Cartels are not easy to form. The incentive to “cheat” from a cartel is huge. We actually see this in OPEC a lot. The smaller countries in opec will actually produce more than they are “supposed” to, and are generally against the cuts in production. We see Saudi Arabia and the big producers need to cut more than others to maintain the cartel. Saudi Arabia can do this because they produce soo much oil.
This whole process is also made a lot easier because many oil producing countries are NOT democracies. The Saudi royal family does not need to get any approval or votes to cut production. They don’t need to pass laws or threaten corporations.
It is much much harder for even just the US to “decide” to import less oil. It is basically impossible for a large group of democratic countries (The US, the EU) to decide to, and actually form, a working cartel.
I mean, in the US it was literally easier to GO TO WAR than implement price controls…
With what bargaining power? They’d have to buy oil from the other side regardless. Modern society just doesn’t work without oil.
The answer is that Cartels are not easy to form. The incentive to “cheat” from a cartel is huge. We actually see this in OPEC a lot. The smaller countries in opec will actually produce more than they are “supposed” to, and are generally against the cuts in production. We see Saudi Arabia and the big producers need to cut more than others to maintain the cartel. Saudi Arabia can do this because they produce soo much oil.
This whole process is also made a lot easier because many oil producing countries are NOT democracies. The Saudi royal family does not need to get any approval or votes to cut production. They don’t need to pass laws or threaten corporations.
It is much much harder for even just the US to “decide” to import less oil. It is basically impossible for a large group of democratic countries (The US, the EU) to decide to, and actually form, a working cartel.
I mean, in the US it was literally easier to GO TO WAR than implement price controls…
The answer is that Cartels are not easy to form. The incentive to “cheat” from a cartel is huge. We actually see this in OPEC a lot. The smaller countries in opec will actually produce more than they are “supposed” to, and are generally against the cuts in production. We see Saudi Arabia and the big producers need to cut more than others to maintain the cartel. Saudi Arabia can do this because they produce soo much oil.
This whole process is also made a lot easier because many oil producing countries are NOT democracies. The Saudi royal family does not need to get any approval or votes to cut production. They don’t need to pass laws or threaten corporations.
It is much much harder for even just the US to “decide” to import less oil. It is basically impossible for a large group of democratic countries (The US, the EU) to decide to, and actually form, a working cartel.
I mean, in the US it was literally easier to GO TO WAR than implement price controls…
they have no bargaining power ot counter them with.
the way to do that would be moving away from Oil which by itself is not an easy feat(and actively lobbied against). but if htis could be achieved then OPEC would have ot deal with a dwindling customer base + an inability ot enforce it(what are they gonna do?, go to war with most of the west to force them to buy Oil from them? without a sizeable military and the will, that likely ends up with these nations being invaded instead to secure these resources)….tho politically this might just end up destabilizing the whole region further.
lastly you have the issue that because the vast majority of the Oil trade is done in one currency(the Us Dollar), attempting ot shut off this market’s OPEC imports is gonna dillute trust in the dollar and there are interests that would rather not lose money.
they have no bargaining power ot counter them with.
the way to do that would be moving away from Oil which by itself is not an easy feat(and actively lobbied against). but if htis could be achieved then OPEC would have ot deal with a dwindling customer base + an inability ot enforce it(what are they gonna do?, go to war with most of the west to force them to buy Oil from them? without a sizeable military and the will, that likely ends up with these nations being invaded instead to secure these resources)….tho politically this might just end up destabilizing the whole region further.
lastly you have the issue that because the vast majority of the Oil trade is done in one currency(the Us Dollar), attempting ot shut off this market’s OPEC imports is gonna dillute trust in the dollar and there are interests that would rather not lose money.
they have no bargaining power ot counter them with.
the way to do that would be moving away from Oil which by itself is not an easy feat(and actively lobbied against). but if htis could be achieved then OPEC would have ot deal with a dwindling customer base + an inability ot enforce it(what are they gonna do?, go to war with most of the west to force them to buy Oil from them? without a sizeable military and the will, that likely ends up with these nations being invaded instead to secure these resources)….tho politically this might just end up destabilizing the whole region further.
lastly you have the issue that because the vast majority of the Oil trade is done in one currency(the Us Dollar), attempting ot shut off this market’s OPEC imports is gonna dillute trust in the dollar and there are interests that would rather not lose money.
Simply put:
You buy oil, burn it, and use the power to move your economy. You can’t decide to buy more from the oil cartel, you can only retaliate by buying less. And buying less means you have to shut down some industry and services that run on oil, making way more damage to you than effect on the cartel. The cartel can always sell to someone else, or even not sell and wait, without massive repercussions.
That’s why industry nations generally bomb the resource nations into submission. That’s gonna affect the resource nation more than the bombing nation.
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