You know how $75 oil feels ‘normal’ these days? Well, you can probably thank OPEC. The chart below taken from the Economist puts this oil production cartel in historical perspective. All-in-all, real prices for oil (adjusted for inflation) are far higher today than when OPEC was founded, and are at one of their highest levels.
Oil’s getting scarce you say? Well, it is, but at the same time if it weren’t for OPEC prices would likely be far, far lower. That’s because while OPEC only accounts for just above 40% of world production today, it still accounts for 80% of the world’s reserves according to The Economist.
Which means that if OPEC members produced oil and sold like non-OPEC members, ie. equivalent to its actual reserves, then world production would be vastly higher, and oil prices wouldn’t be near peak real price levels, especially right after a global economic crisis. Kudos OPEC.