The Public Interest

An OPEC obituary

Arlon Tussing

Winter 1983

AT the end of 1981, oil prices were suffering their greatest decline in half a century, but many industry executives and forecasters cautioned that the attendant “glut” was a temporary phenomenon. Despite many signals to the contrary, that opinion persisted well into 1982, with Occidentals Chairman Armand Hammer and others predicting $100-per-barrel oil in ten years. The “scarcity” mentality that fed the price leaps of 1974 and 1979, plus a belief that unpredictable Middle Easterners control the world oil market through OPEC, gave such assumptions nearly axiomatic status during the past decade. But the exporting nationsboast that “oil in the ground is a better investment than money in the bank” is turning out to be so much wishful thinking.

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