crude oil and thereby increased the world price of oil by nearly 300
percent. In 1979, further output restrictions led the price to increase by
another 120 percent. During the 1980s and 1990s, as oil production by
non-OPEC countries increased significantly, OPEC found it difficult to
maintain such a controlling influence on the oil market. OPEC also ran
into problems enforcing the agreements among its members. As we will
see in this section, these are typical challenges that all cartels face.
Another well-known example of a cartel that was successful over many
years is the diamond cartel controlled by the South African company
DeBeers. DeBeers produces a significant share of the world’s annual
output of rough diamonds but also purchases diamonds from smaller
producers worldwide. Years ago, DeBeers controlled well over half of the
world’s diamond supply. Today, after many new diamond mines have
been developed beyond the control of DeBeers, the company controls 30
percent or less of overall supply. Its ability to influence the price of
diamonds is thus much less than it once was.