Can OPEC Swing an election?
Say you have a lame duck president whose policy is not friendly to your needs. Say you raised prices 100% to create a recession so that the current president's party could not come back into power in an upcoming election.
Say you drop prices 50% after the election of the party who is favorable to your position you are still making money and you have curried favors.
This would be the beginning of a wonderful friendship.
5 comments:
Interesting theory but I think they are a little more small minded than that. You are giving them too much credit.
Mmm...this assumes all things are equal in this system. I think overwhelming factors of supply and demand would put even OPEC in such a pinch, that if prices were that high, people simply would not buy, creating such a deficit for the group, that even they (who have gigantic operating costs and margins that really aren't that crazy taking into account how big they are) would be in a lot of pain.
It's just not likely. Their business has to run just like everyone else's. That said, it doesn't mean they don't have tremendous power in terms of an election; they do.
Oil has no elasticity, so yes I think this could very well work but there is one problem. Although they could easily cut production, thus raising prices, they could not increase production to lower prices. They are running at capacity right now, they can not produce more oil at the drop of the hat. It would take major build outs of existing and new production facilities.
We use oil for EVERYTHING we consume, not just gas. No matter how much we stopped driving, higher and higher oil prices woudl kill us.
True, but if the cost of oil is that expensive, all of the business relying on it would have to change their business plans to cut costs. I'm thinking mostly of manufacturing, where rising cost of oil to run big machinery and transport parts would necessarily translate to higher priced products for businesses (i.e. air conditioning units for refrigerated transportation), so business owners would be less likely to replace machinery at a higher cost, so as to still have business by not passing as much of increased cost to their direct customers. It doesn't have to be gas--consumers drive this economy.
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