Jerry Taylor, a senior fellow at the Cato Institute, told CNBC’s “Morning Call” that OPEC influences the price of oil, but can't determine it.
“Prices are established by global supply and demand,” Taylor said Wednesday. “OPEC does not control global demand and is has a minority control over global supply. It influences prices, perhaps, but it certainly can’t establish prices. All they can affect is how much (member states) produce.”
But Raymond Learsy, author of Over A Barrel: Breaking the Middle East Oil Cartel, said the price of oil has increased 300% to 400% in the last six years.
“OPEC has constrained product consistently over the last few years,” he said. “It’s meant to control the price of the marketplace and they’ve done it extremely well.”
Taylor said the price of oil is set by worldwide demand and is played out in futures markets, spot markets and secondary exchanges. He said it’s “virtually impossible” to manipulate the markets where there are millions of buyers and sellers.
“In 1998, oil prices were around $10 to $12 a barrel,” Taylor said. “Do you think OPEC ministers decided ‘Yeah, $12 a barrel is better than $70 so let’s go with $12’?”
Taylor said no academic study ever found evidence of worldwide price manipulation.