opec suspends production quotas

"In March 1971, the balance of power shifted. That month the Texas Railroad Commission set proration at 100 percent for the first time. This meant that Texas producers were no longer limited in the amount of oil that they could produce. More importantly, it meant that the power to control crude oil prices shifted from the United States (Texas, Oklahoma and Louisiana) to OPEC." (source)

U.S. crude oil production peaked in 1971. Now fast forward to the present and the most recent OPEC meeting in Vienna, Austria- Septemeber, 2006.

"Nigerian President Edmund Daukoru said that output quotas no longer applied. 'We stopped thinking of quotas a long, long while ago, and if the conference wants to return to quotas, we will do what is necessary to balance demand and supply against prices,' Daukoru said after OPEC ministers ended their formal meeting. Asked to clarify that this meant that there was no quota, Daukoru said: 'There is no quota, no, either up or down.'"(source)

When I read that OPEC has suspended production quotas I was highly surprised and a bit stunned. My wife asked me what it meant and I told her I didn't know. It is not however a decision that should be taken lightly. I found out about it from reading Jeff Vail and I share his sense of unknown implications. He says fasten your seatbelts. I'll add put on a helmet.