Impact Of Brazil’s Crude Oil Find On Global Crude Oil Prices

Brazil recently inferred that it might possibly be joining the OPEC cartel and this has triggered a lot of concern within the ranks of industry “experts”. According to CNN, "analysts" feared that putting Brazil's big new oil finds under the Organization of Petroleum Exporting Countries' banner could result in even higher oil prices.
Just who are these "analysts?" Either they need remedial economics training, or they are tragically misinformed about their field of expertise or they know something that even God and Einstein were never let in on.
The analysts' fears seem to fit with the belief that OPEC is some kind of supernatural monster. This fear is irrational; I believe it's based on a miscomprehension of what brought about the energy crisis in the 1970s and what its consequences were. That sad time period put fear into the populos and into the experts: If oil exporters can wreak havoc upon our lives then, then what's to stop them from doing it again? Surely not the normal rules of economics, maybe not even the laws of physics. HA!!! Such nonsense from adults!
The OPEC countries are notable for the myopic focus on the profit axiom. Their riches depend pretty much exclusively on oil revenues. Even Saudi Arabia, which could reduce its production, is unlikely to do so to any great extent. It would be just too expensive.
Let’s do some math, something the experts neglected to do. Say Brazil gradually moves up to contribute 1,000,000 barrels per day to the world’s oil output. Just to keep prices from falling , the Saudis would be required to sacrifice in the range of $35 billion annually in revenues. Even for those rich bastards that is a lot of cash.
If Brazil joins, it is more likely to diminish OPEC than enhance the oil cartel's power. If the "analysts" had not been making paper airplanes during their economics courses, they'd have learned that cartels, are historically quite fragile. And one of the main reasons for fragility is the admittance of new members into the cartel.
In America in the late 1800s, the railroad companies kept attempting to create cartels but they'd collapse whenever new railroads would ask to join. Why? Because as much demand as there might be for something, there is still an end to it and so any time a new company would join, older members were ordered to surrender a portion of their market share, and so would OPEC countries have to if Brazil joined.
The result 120 years ago was price wars between the railroad companies which led to plummeting prices.
The belief that OPEC will avert this consequence demonstrates these “experts” to be ignorant of both economics and history – and not just early American history but recent history as well.
OPEC gained its status as the oil bogeyman back in the 1970s, and for sure the US endured some dark times during that era. But America recovered nicely in the 80s and did even better in the 90s.
"Analysts" may believe that there is still an oil industry bogeyman out there with powers to defy logic, rewrite history, overcome the laws of economics, common sense and physics by their own decree. But OPEC is not quite so powerful in reality, and is not nearly the threat that these talking heads want us believe. Remember, these are the same masters of fear mongering that want us to believe that nineteen Arabs with box cutters overpowered NORAD and the world’s most powerful military and made three buildings in lower Manhattan crumble in free fall speed by flying planes into two of the three buidings.
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