OPEC's Strategy: An Update

An article published in the Infantry Journal (U.S.) many years ago contained the following  exotic question: “If you only had an hour in which turn civilians into  soldiers, of what would your instruction consist ?”

I’m not sure that I answered that question correctly, because somewhat later – though I was first in my class – I was expelled from the infantry leadership school at Fort Ord (California) and put to work on a garbage truck. (In case you are sorry for my dilemma, let me note that  the place where that garbage truck was parked was about 25 minutes from wonderful Carmel (California), and had it not been for thoughts about visiting wonderful Paris in the near or distant future, I would have been quite content to be a crew member on that truck for the remainder of my time in the U.S. Army.)

These days I am interested in an equally important query, which has to do with OPEC’s intentions where the production and export of oil are concerned, and this matter has suddenly become extremely important because of a change in strategy of Saudi Arabia. I dealt with oil economics several years ago in lectures in Paris, and publications on 4 or 5 sites both then and now, and on that occasion was  certain that I had all the  correct answers. What happened shortly after proved that I was correct, especially when the price of oil went into orbit.

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When I presented my conclusions to students and teachers at the Ecole Normale Superieure and the University of Paris (Dauphine) 6 or 7 years ago, I began my sermon in the following manner: OPEC intends to export (and perhaps produce) as little oil as possible. It ended on both occasions with: OPEC intends to export (and perhaps produce) as little oil as possible, regardless of what they say or do! I also employed my favourite pedagogical strategy and repeated this mantra a number of times to friends and neighbours, although many of them  had a difficult time getting the message.

In dealing with OPEC’s strategy today I am mainly interested in the intentions of Saudi Arabia, because when so-called experts talk about what is going on in the Gulf, it is obvious that they are primarily interested in oil rich or super-rich Saudi Arabia. But the logic in play here is an extension of the work of three brilliant economists. Professor Gunnar Myrdal, who was one of my teachers at the University of Stockholm; Professor Howard Chenery, who organized a small conference to which I contributed  in Paris in the l980s, and whose book (together with Paul Clark) I occasionally used when I taught at a U.N. Institute in Dakar (Senegal); and of course the superb article by Professor A.A. Kubursi ‘Industrialisation in the Arab States of the Gulf: A Ruhr without water‘ (1984).

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