Opec has not earned much with $70 crude

Opec's per capita income is only one third of its per capita in the 1980s argues a senior US based energy economist. Oil&Gas Middle East finds out more.

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By  Jyotsna Ravishankar Published  December 4, 2005

There is no more marketable excess crude oil in the Organisation of Petroleum Exporting Countries (Opec), said a senior energy economist, on a recent visit to Dubai. Opec has no excess crude that can be readily bought by countries, said A F. Alhajji. Alhajji is an energy economist at Ohio Northern University and the moderator of the Gulf Energy Programme at the Gulf Research Centre, Dubai. At a recent workshop on ‘oil prices, the past, present and future’, the economist said that the recent hike in oil prices, were an exception to the historic norm, where political turmoil has always been the root cause of high oil prices. He said this meteoric rise in crude prices, was largely because of the foreign policy of the United States. Decades of sanctions on many oil producing countries and threats of sanctions on the rest, deterred large-scale investment in most of the producing world, he said. “More than Saddam (Hussain) controlling the oil prices, the United States foreign policy seemed to control it.” Despite a surge in the price of crude oil, most producers have been criticised for a long time for not sufficiently investing in their facilities. However, the economist seems to think that even when crude is hovering at US $70, the per capita income of most producers has not risen in proportion. “High oil prices are not increasing the per capita income of the countries. Opec’s per capita income currently is only one-third of its income in the 1980s. So, the producers still do not have the wealth to expand the production capacity,” he said. When asked if Opec had lost control over the market, he said the 11-member organisation realistically never had control over the markets, it was only Saudi Arabia that had control, and continues to have control over consumers.

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