| Since the 1980s, the Organization of Petroleum Exporting Countries (OPEC) has operated from the assumption that someday in the future (for years, viewed as by the 2010s), the industrialized world would use up its “easy” oil and become increasingly dependent on OPEC and in particular the vast reserves of the Middle East. In this world, OPEC’s petro-power would increase over time and therefore all the oil cartel really needed to do was wait it out for that day to come.
An econometrics study by New York University economist Dermot Gately in 2004 confirmed the view within OPEC that “the (revenue) payoffs to OPEC are relatively insensitive to faster output growth.” Through the 2000s and up until last year, OPEC took a revenues oriented strategy, believing that the “2010” world had arrived and its oil was more valuable under the ground than out in the market...............................................Full Article: Source
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