greg (grysar) wrote,

  • Music:

Random thought on how to break OPEC

OPEC is a monopoly of gas producing countries, they limit production to maximize profits. I'm not sure if the math works but there may be a simple mathematical solution.

Each country is in OPEC because they will make more profit as part of a monopoly than otherwise. Course, the system is unstable as there are incentives to cheat, produce extra oil taking advantage of the restraint of other members. In addition there are maximum profits amounts economically speaking.

So, why not just offer one country a subsidy such that they are guaranteed to get at least the profit produced by the OPEC system working perfectly. This subsidy would have to be arranged in such a way to encourage maximizing production but otherwise should of course be kept to be just a smidgen above what OPEC would theoretically offer. I think for a major consumer such as the US it would be distinctly possible to profit greatly from this as while we do have to subsidize one country our oil in general would be much cheaper. This can be mathematically checked but I have other priorities right now.

So, this make sense?
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