e Beers is able to create an
artificial scarcity of diamonds through its wholly-owned Central
Selling Organization (CSO), thus keeping
http://en.wikipedia.org/wiki/Cartels A cartel is
a group of formally independent producers whose goal is to
increase their collective profits by means of price fixing,
limiting supply, or other restrictive practices.
The US oil and gasoline markets work the same way seeking to
restrict the flow of IRAQI oil for example.
Now hold on a minute: Why is our government in a “difficult”
position if Iraq is a “swing producer” of oil?
The answer was that Saddam was jerking the oil market up and
down. One week, without notice, the man in the moustache
suddenly announces he’s going to “support the Palestinian
intifada” and cuts off all oil shipments. The result: Worldwide
oil prices jump up. The next week, Saddam forgets about the
Palestinians and pumps to the maximum allowed under the
Oil-for-Food Program. The result: Oil prices suddenly dive-bomb.
Up, down, up, down. Saddam was out of control.
“Control is what it’s all about,” one oilman told me. “It’s not
about getting the oil, it’s about controlling oil’s price.”