Toward a History of OPEC

Few international organizations have seen their reputations change as dramatically over the last several decades as the Organization of Petroleum Exporting Countries (OPEC). During the energy crisis of the 1970s, OPEC was widely thought to exert immense power over the global oil market. Many observers, especially in oil-importing countries, blamed OPEC for driving up prices and using its economic power to manipulate world politics. Today, by contrast, the rise of shale oil and the post-2014 collapse of oil prices has convinced some commentators, like Citi’s Ed Morse, that OPEC has lost its power to shape the market. Other critics, including Brown University’s Jeff Colgan, argue that OPEC is hobbled by disagreements among its member states and never had the ability to determine oil prices in the first place.

In the face of such deep uncertainty about the nature and influence of OPEC, and such sweeping changes in the global oil market, understanding how we got to this point is more important than ever. In order to help resolve some of that uncertainty, a workshop on the history of OPEC met on 17 April on the campus of New York University Abu Dhabi (NYUAD). The workshop was funded by the NYUAD Institute and organized by Giuliano Garavini, a Senior Research Fellow at NYUAD and a lecturer at the University of Padua in Italy. It included twelve participants, ranging from academic historians and political scientists to energy specialists from government and private industry.

The main purpose of the event was to plan a full-scale conference that will be held at NYUAD next year. The discussion dealt not only with the technical aspects of how the 2017 conference would be organized, but also on the main themes and questions that a conference on OPEC should address. Those topics included, among others:

The ideologies that underpinned OPEC, including resource nationalism
The relationship between OPEC, postcolonial nationalism, and the Third World / nonaligned movement
The relationship between OPEC and its member states, especially in cases of disagreement between those member states
OPEC’s relations with oil consumers and with non-OPEC producers like Russia, Norway, and Mexico
OPEC’s response to previous periods of low oil prices, like the 1980s and 1990s
The challenge of studying OPEC member states with limited access to official archives

The highlight of the workshop was a talk by Dr. Majid Al-Moneef, the Secretary-General of the Supreme Economic Council of Saudi Arabia. Dr. Al-Moneef previously served as Saudi Arabia’s OPEC Governor (the official Saudi representative to OPEC), and held a number of other positions in the Saudi government and the academic world. He described the evolving role of OPEC in the world oil market between 1960 and the present day. Dr. Al-Moneef identified five phases in OPEC’s history, when the organization acted as a trade union for its member states (1960-73), set world oil prices during the heady days of the oil boom (1973-82), unsuccessfully attempted to manage both price and production levels during the subsequent oil glut (1982-86), served as the world’s residual supplier and manager of spare capacity (1987-2005), and relied on formula pricing and production restraint (after 2005).

Dr. Al-Moneef also discussed Saudi Arabia’s unique role in OPEC, and explained some of the most important challenges faced by OPEC. Some of those challenges have been present since OPEC’s founding, including the difficulty of reconciling the collective interests of the organization with the particular interests of individual member states. Other challenges, like the growth in U.S. shale oil production and rising concern about climate change, originated more recently. Dr. Al-Moneef’s discussion of OPEC’s history demonstrated, however, that OPEC has endured many previous challenges and major shifts in the oil market over the last five decades, suggesting that OPEC is a more flexible organization than its critics often assume.

The workshop raised a wide variety of important questions, but it was only the beginning of what its organizers hope will be a wide-ranging effort to understand the history of OPEC. It was intended to pave the way not only for next year’s conference in Abu Dhabi, but also to help organize a network of scholars that will continue to collaborate well into the future.

#Opec #NYUAD