Petroleum economcs and project management Assignment

Petroleum economcs and project management - Assignment ExampleOPECs starting time toll band machine was developed at its 109th face-off of its Conference in March 2000. This mechanism directs that the expense of a barrel will range between $22-$28 in order to parallelism the needs of both the consumers and producers. This method has ensured that OPECs role in stabilizing the grocery is successful because since its inception, the bonny price of a barrel has been $25.30 per barrel. However, this price band mechanism states that 500,000 barrels per dollar should be added to the grocery in instances where prices rise above $28 per barrel. This is to ensure that cartels in the industry do not hold up advantage of high prices and create a shortage hence destabilizing the market. (Alvaro, 2003)As part of its role in ensuring stability in the inunct market, OPEC is supposed to deal with shortages that arise from political instability in oil producing areas that may lead to sprawl ing up of prices. For instance the 2000 September 11 incidence in the ground forces fol showtimeed by fight in Iraq lead to war premium a speculation of oil shortage due to effects of war. Therefore as part of its role in ensuring stability, OPEC convened a consultative meeting to discuss on the ways of countering the looming shortage. This conference was aimed at finding ways in which OPEC could provide assurances to the market that its member countries have the capacity to overcome any shortfall that may occur due to war in Iraq. During the conference, it was agreed that member countries raise their outputs to maximum to meet the market needs and at the aforesaid(prenominal) time reduce actual production so as to ensure the threat of over-supply during the season of low demand. (Edmund, 2006)Also, OPEC must demonstrate its commitment to ensuring that the prices do not rise and fall unstably. For instance, in the wake of the price weakness that followed the tragic bomb in Septem ber 11 and the war in Iraq, OPEC used the price band strategy in