The world’s oil supplies are effected by the single largest entity, the Organization of the Petroleum Exporting Countries (OPEC), which is a consortium formed by 13 countries. These countries are: Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.
According to the Energy Information Administration (EIA), together, these 13 nations are responsible for 40 percent of the world’s oil production and they hold the majority of the world’s oil reserves.(source: EIA). Whenever OPEC desires to raise the price of crude oil, it simply reduces production. This causes gasoline prices to surge because of the short supply, and also because of the probability of future reductions. When oil production drops, gas companies become worried. The mere threat of oil reductions can give a rise to gas prices.
In April 2001, OPEC decided to reduce its collective production by one million barrels per day. Due to this decision made by OPEC on May 14, 2001 American consumers faced a rise in gas prices, the prices hits an average height of $1.71 per gallon.
