ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In the oil and gas industry, the Organization of the Petroleum Exporting Countries (OPEC) is often used as an example of a cartel. Although there is debate around whether the economic evidence demonstrates it is a true cartel, OPEC’s member countries do exert market influence.

Detailed explanation-2: -OPEC’s objective is to co-ordinate and unify petroleum policies among Member Countries, in order to secure fair and stable prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the industry.

Detailed explanation-3: -The governments of the OPEC countries agreed to coordinate with petroleum firms (both state owned and private) in order to manipulate the worldwide oil supply and therefore the price of oil. When firms agree to collude, that is they agree to a certain price and quantity for a good or service, they create a cartel.

Detailed explanation-4: -In 2016, OPEC allied with other top non-OPEC oil-exporting nations to form an even more powerful entity named OPEC+, or “OPEC Plus.” The cartel’s goal is to exert control over the price of the precious fossil fuel known as crude oil.