OPEC. You have heard of it in passing. Maybe while you have been watching the news you might have heard of OPEC raising or lowering its production of oil. Yet, perhaps you are not sure what OPEC is or how they affect you. OPEC stands for the Organization of Petroleum Exporting Countries and this organization greatly affects you and your wallet. The amount of oil that is produced creates a change in gas prices, and gas prices create a change in how Americans have to live their lives. Read below for more about what OPEC is and how the decisions they make change your life.

What Exactly Is OPEC?

You should first familiarize yourself with the essentials of OPEC such as the nations included. OPEC was created in Baghdad, Iraq in 1960 and started with five nations: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Since then, more countries have joined. These include Qatar, Indonesia, the Socialist Peoples Libyan Arab Jamahiriya (Libya), United Arab Emirates, Algeria, Nigeria, Ecuador and Gabon. So what do these nations do? The goal according to the organization itself is to “co-ordinate and unify petroleum policies among Member Countries, in order to secure fair and stable prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the industry.” Whew! Now you know who they are and you might have a vague concept of their purpose.

How OPEC Affects Gas Prices?

The fact is OPEC often operates on the sheer principal of supply and demand. It is not a direct controlling of oil prices; however the control is there nonetheless. The worldwide demand for oil currently has nowhere else to go but up, especially with nations such as China and India in the process of wide-scale industrialization. When demand is high and production is not increased, prices rise. OPEC has all of the different oil producing countries that together set production levels, thus, by controlling production the organization controls the price. And the production is tweaked down to the very last barrel. The price of oil obviously has a direct effect on the price American’s pay at the gas tank.