The Emperor Has No Clothes: The Limits of OPEC in the Global Oil Market

Abstract

Scholars have long debated the causal impact of international institutions such as the World Trade Organization or the International Monetary Fund. This study investigates Organization of Petroleum Exporting Countries (OPEC), an organization that purports to have significant influence over the market for the world's most important commodity–petroleum. Using four empirical tests, I find that OPEC has little or no impact on its members' production levels. These findings prompt the question of why so many people, including scholars, believe in OPEC's influence over the world's oil supply. The idea of OPEC as a cartel is a “rational myth” that supports the organization's true principal function, which is to generate political benefits for its members. One benefit it generates is international prestige. I test this idea using data on diplomatic representation and find that OPEC membership is associated with increased international recognition by other states. Overall, these findings help one to better understand international regimes and the process of ideational change in world politics.

Forty Years of Oil Price Fluctuations: Why the Price of Oil May Still Surprise Us

“…Cairns and Calfucura (2012) conclude that OPEC has never been a functioning cartel. For further discussion also see Almoguera et al (2011), andColgan (2014). 8 For a detailed discussion of how these policies were implemented see Skeet (1988).…”

Who is Who? Identifying the Different Sub-groups of Secondary Stakeholders within a Community: A Case Study of the Niger Delta Region of Nigeria Communities

“…Nigeria became a member of the Organisation of Petroleum Exporting Countries (OPEC) in July 1971. The main purpose being to safeguard her interests in the international oil market while OPEC exists to regulate member countries' annual production in order to influence oil prices in the international market (Ogwo, 2016;Edomah et al, 2016;Colgan, 2014;Takon et al, 2014;Khan, 1994).…”

A place in the Sun? IRENA’s position in the global energy governance landscape

“…This study complements other studies of international energy organizations and global energy governance that focus on, for example, comparing institutional design features of international energy organizations, such as mandate and membership (Wilson 2015) or studies of individual energy organizations (Colgan 2014;Van de Graaf 2012;Florini 2011). Our decision to look at IRENA among other international energy organizations draws inspiration from the organizational ecology approach.…”