 |  |
Do not blame Opec for a rise in the price of oil
In this week's City AM column, Prof. Anthony J. Evans looks at who is responsible for oil prices: the supplier or the market.
"When discussing oil prices, it is common to encounter two views that are confused: the first is that Opec, the cartel to which many of the world's oil-producing countries belong, sets the price of oil, the second is that it can cause inflation by increasing the price of oil through restriction of the quantity it releases to the global market. While both views do certainly have kernels of truth, they can also be misleading.
"Genuine monopolies are extremely rare in market economies, and therefore any producer is in competition with others. Indeed, even if a market had a single seller the price the seller can charge is also a function of demand. Therefore it is impossible for any supplier to set prices – only the market can."
You can read the rest of Anthony's column by visiting the City AM website. You can also catch up on all of Anthony's articles by clicking here.
