Oil-Importing Countries Need a Cartel to Challenge OPEC
A nascent buyers’ club could eventually put pressure on producers and help the environment.
Unstoppable.
Photographer: Thomas Trutschel/Photothek via Getty Images
The announcement last month that China and India are considering forming an “Oil Buyers’ Club” to counter the market power of the Organization of Petroleum Exporting Countries is proof that the run-up in oil prices this year, from $30 a barrel to $80, is happening in a very different context than spikes of the past. The proposed alternative to OPEC could be good news for importing nations’ economies and the environment.
Like any cartel, OPEC exists to raise the price of oil by reducing competition. Its biggest risk is that if it lifts the cost too high, competitors (such as U.S. shale producers) will pump too much crude, or customers will find substitutes for oil.