London — Oil cartel Opec members are struggling to protect their revenues in the face of renewed competition from US shale producers and other suppliers outside the organisation. Opec’s revenues from petroleum exports have fallen to just $446bn in 2016 from $1.2-trillion in 2012 (Annual Statistical Bulletin, Opec, 2017). But past experience strongly suggests Opec’s effort to stabilise oil inventories and prices while protecting its market share will fail. Since the beginning of the modern petroleum industry, periods of high prices and concern about supplies running out have alternated with episodes of low prices and oversupply. High prices and concerns about availability normally trigger an exploration boom and rapid innovations in drilling and production technology, as well as efforts to use oil more efficiently. The resulting increase in production and slowdown in consumption growth creates conditions for a subsequent slump. The basic narrative has not changed since the first oil ...
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