Interesting take in this morning's Econonomist that says the O'PECkers are not quite the master's of their world - nor the oil market - as many think:
Traditionally, in order to keep prices high, OPEC has reined in its own production, allowing competitors outside the cartel to expand their output at its expense. So OPEC's share of the world market has fallen from more than half in 1975 to just over 40% today (see chart). As a result, the state-owned firms that run the oil industry in OPEC countries have had little reason to invest in new production capacity.
Their output today, of some 27.5m b/d, is much the same as it was in the 1970s. What is more, they are scarred by the memory of the 1980s, when slower-than-expected growth in demand and a glut of non-OPEC supply left them saddled with lots of expensive excess capacity. The high prices of recent years are partly a legacy of that glut, insofar as OPEC, still leery of over-investment, allowed its cushion of spare capacity to dwindle to almost nothing, heightening supply concerns.
I like your Manhattan project idea. But why create a new one? Let's blow the dust off the plans for some nuclear power plants and start building - not near my house of course...
Modified to add this chart - thought it interesting to see how where
our oil comes from has fluctuated over the last several decades.