A golden anniversary for OPEC
OPEC headquarters in Vienna
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STEVE CHIOTAKIS: As the economy is slowly -- very slowly -- gets better this year, so too is the expectation that global oil demand will grow. But the International Energy Agency today said that growth isn't likely to last into next year.
And that's a certainty -- the IEA says -- if the global economy gets weaker. Not a very nice anniversary present for the oil cartel OPEC, which turns 50 today. On September 10, 1960, a conference kicked off in Baghdad which led to its formation. Marketplace's Stephen Beard is with us live from our London bureau to figure out how they're commemorating today. Hi Stephen.
STEPHEN BEARD: Hello Steve.
CHIOTAKIS: So looking back 50 years, has OPEC been a success?
BEARD: It's done pretty well for its members. The price of oil was only $3 a barrel in 1960. Today, it's around $74. That's not been great for the rest of us, of course. And there's also the issue of volatility. When the cartel was born, its stated aim was price stability, and that is certainly hasn't achieved. If you remember, oil was $174 a barrel only two years ago. The price has been all over the place.
CHIOTAKIS: Yes, it has. I remember those days. So the cartel hasn't been a win for the rest of us, are we stuck with OPEC for another 50 years?
BEARD: Well for a few more years at least. The big threat is Iraq, oddly enough, which is still a member. If Iraq gets it act together and produces as much oil as it can -- four times more than it's producing today -- that means a lot more oil from OPEC and more difficult for the cartel to control prices. And it could fall apart. But Leo Drollas of Center for Global Energy Studies says Iraq isn't going to be in full-time production any time soon.
LEO DROLLAS: It could be five years from now, it could be 10, or even more. So OPEC still has a bit of mileage left in it, before it start to come under pressure.
Longer-term, of course, OPEC will come under pressure as oil reserves dwindle and renewable energy sources start playing a bigger role.
CHIOTAKIS: All right, Marketplace's Stephen Beard reporting live from London. Stephen, thanks.
BEARD: OK Steve.