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OPEC was formed in the 1970s and the cartel could control prices - because the global economy runs on oil, and bulk of the reserves were in the Middle East.
They figured out, Oil Demand is inelastic. People have to buy no matter what price. It’s the most dense form of energy.
They figured out, Oil Demand is inelastic. People have to buy no matter what price. It’s the most dense form of energy.
Price Elasticity if Demand in the short run was 8x.
1% cut in Oil production would lead to 8% rise in price.
But if prices are too high, then people start saving energy and demand falls.
1% cut in Oil production would lead to 8% rise in price.
But if prices are too high, then people start saving energy and demand falls.
