Is OPEC becoming irrelevant?

Once all-powerful oil cartel loses its clout when its members are all operating at capacity.

NEW YORK (CNN/Money) – While OPEC ministers met in Vienna Monday to discuss future production and price targets for oil, oil analysts and traders were instead focused on the waters off the Florida Keys.

There Tropical Storm Rita had the potential to turn into a hurricane and again pound oil production and refinery capacity along the U.S. Gulf Coast. Private weather tracking service Weather 2000 Inc. estimates that Rita’s path could hit four times as many energy rigs and platforms in the Gulf as Hurricane Katrina and 2004’s Hurricane Ivan combined. Both those storms sparked record oil prices in their wakes.
“With another storm threatening the half the Gulf that avoided Katrina, it has traders spooked this morning,” said oil analyst Peter Beutel of Cameron Hanover about Monday’s sharp rise in oil prices.

But even if Rita misses oil faculties, traders and economists say that the once all-powerful oil cartel’s official pronouncements have no real impact on the market and the price of oil.

“OPEC became powerless the moment it sold its last barrel of excess capacity, and that was maybe a year ago,” said energy economist A. F. Alhajji, a professor at Northern Ohio University.

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