The Organization of the Petroleum Exporting Countries (OPEC) is often thought of as a group from the middle east. It was originally formed by Iraq, Iran, Kuwait, Saudi Arabia, and Venezuela in 1960. Their headquarters moved in 1965 to Vienna after adding Qatar, Libya, and Indonesia. It is a worldwide conglomerate and their official language is English. Iraq however has been excluded from OPEC production quotas since 1998 due to the political instability in that country. The war in Iraq must have some effect, but that’s another topic.

The concept of the organization itself however was first proposed by Venezuela way back in 1949 — even today that country is the fifth highest oil producer in the world. At the first of this year there were fourteen members of OPEC, only six of which were in the Middle East.

The fact is that even with Indonesia leaving OPEC in May of this year, less than half of the now thirteen members are in the Middle East. We often site OPEC as the culprit as the control over the oil industry. After all, their focus is to: ‘...devise ways and means of ensuring the stabilization of prices in international oil markets with a view to eliminating harmful and unnecessary fluctuations...’ but it does not seem to be working.

Our five largest oil importers, in order, to date are: Canada, Saudi Arabia, Mexico, Nigeria, and Venezuela — only two of which are OPEC nations and only one is in the Middle East.

Strikingly, of the top ten oil exporters to the US, only three are Middle Eastern nations, and in the top fourteen, six are not part of OPEC at all. Of 20 million barrels of oil burned up each day in America, only about 11% (2.3M) are from OPEC. Who knew Canada is our largest foreign contributor of raw crude?

There are over 100 oil companies world wide and 20 within the United States alone. So it must be the oil companies fault, we think. Our country’s largest oil company Exxon Mobil had a $40.6 billion profit for 2007 — the largest ever reported of any company ever in the history of the United States. The second largest, Chevron Corp., had $18.7 billion profit for 2007. This seems like an exorbitant amount of money — and it is, however while Chevron’s profit is greater in dollars than in 2006, their percentage of profit is less. Yet for 2007, Chevron’s net profit was 8.16%, actually a third of a percent less than the previous year.

Therefore oil company profits here are about 8% — geez, I write and publish books on America’s History and my margins are larger than that. I just wish I sold as many books as they do gallons.

For the oil companies, therein lies the key: volume. Chevron processes some 2.8 million barrels of oil per day — that’s some 118 million gallons of gas — daily.
(3) David R Baker, SF Chronicle, February 2008

After the purchase of crude oil, there are refinery costs, marketing costs, and distribution costs.