Opec 's Growth And Business

1921 Words8 Pages
Synopsis

OPEC was founded in 1960 with 5 counties and the goals to be a dependable oil market for themselves, and to stimulate economic growth in other countries. Leading up to the 1970’s OPEC’s growth and business was relatively unnoticed until an Iranian revolution and Arab oil embargo pushed oil prices to new levels. Changing consumer opinions about oil and over supply led to a market crash in 1986; but from 1990 through to 2000 prices strengthened from increases in technology and a more global market. In 2008 the stock market crisis rippled through all industries and even caused the oil market to suffer. Oil prices then rebounded and at June 2014 oil prices set a record high. OPEC currently has just under 40% of the market share and
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Because so much of Canada’s economy is based off of profits from oil production, the dollar is largely influenced by oil prices. OPEC’s cartel based influence over international oil prices means that they also have a strong influence over the Canadian economy. A brief period of time, referred to as the “honeymoon period”, occurred when both Canadian businesses and consumers were highly profitable. All non-oil businesses would have felt this gain because their cost of business would have decreased, and as labour from ex-oil workers became more available, labour would have become cheaper. With the decrease in oil, the price of goods decreases, and new alternatives can be sought after that was previously too expensive due to transportation. International trade also increases because the cost of moving goods decreases. The “honeymoon” period ends when all citizens and businesses feel the lower income from oil. This is likely accompanied by a falling Canadian dollar, which will lead to gains for export companies, but losses for import companies. Trade agreements also lose their attraction to foreign governments because a key resource is no longer profitable.

Overview This paper will discuss the current situation of OPEC having an absolute advantage over oil production, how OPEC’s petroleum monopoly affects Canada 's economy and it’s effect in oil based job industries. It will discuss how OPEC has a significant amount of power over the Canadian
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