Cartel leads to monopoly profits.

Investors Chronicle, January, 2006

High oil prices are due less to scarcity than to the Organisation of Petroleum Exporting Countries (Opec) exploiting its cartel power, according to a new report. Roger Stern of Johns Hopkins University estimates that the marginal cost of a barrel of oil has more than halved since 1970, and that only 23 of 80 Saudi Arabian oil reservoirs are in production.

Neither is consistent with the notion that oil is running out. Mr Stern estimates that the competitive price of oil should be less than $10 a barrel, implying that Opec countries have made over $600bn of monopoly profits in the past 12 months.