1988 WAEC Economics Theory (a) What are the objectives of the Organisation of Petroleum Exporting Countries (OPEC) ? (b)…

Explanation

(a)Objectives of OPEC are:
(i) To maintain stability of oil price.
(ii) To ensure steady supply of oil to consuming nations.
(iii) To encourage the exploration, exploitation and development of the petroleum resources of member countries
(iv) Stabilization of oil income of its member- nations.
(v) To co-ordinate the petroleum policies of its member- countries and to improve their bargaining power.
(vi) It fixes and allocates production quota to member nations.
(vii) To increase its control over the oil industry.

(b) Problems of OPEC are:
(i) The rivalry for the leadership of the organization between Saudi-Arabia and Iran is a big problem to OPEC.

(ii) The emergence in the international oil market in the 1980's of the North sea oil producers of the UK and Norway.

(iii) The constant disagreement between members of OPEC in the fixing of prices and production quotas, and failure to implement agreed prices and production quotas.

(iv) The activities of the advanced nations in stock piling oil which contributes to the fall of oil prices is causing problem for OPEC.

(v) The world economic depression has brought about fall in oil prices.

(vi) There is increasing research by the advanced countries to find substitute for oil.

(vii) Political disagreements which sometimes lead to war between member-nations like Iran and Iraq war caused a serious problem to OPEC.

(c) Remedies adopted to curtail the problems of OPEC are:
(i) Penalties have been imposed on its members.
(ii) The members of OPEC have embarked on joint research to counteract that of the western and advanced nations to find substitute for oil.
(iii) The organisations is making effort to create unity among its members.
(iv) The key posts in the organisation are being rotated among the member -nations.
(v) OPEC tries to maintain a reasonable price in order to avoid price fluctuation.