De Beers is able to create an artificial scarcity of diamonds through its wholly-owned Central Selling Organization (CSO), thus keeping prices high. A cartel is a group of formally independent producers whose goal is to increase their collective profits by means of price fixing, limiting supply, or other restrictive practices.
The US oil and gasoline markets work the same way seeking to restrict the flow of IRAQI oil for example. Why is the American government in a “difficult” position if Iraq is a “swing producer” of oil? The answer was that Saddam was jerking the oil market up and down. One week, without notice, the man in the mustache suddenly announces he’s going to “support the Palestinian intifada” and cuts off all oil shipments. The result: Worldwide oil prices jump up. The next week, Saddam forgets about the Palestinians and pumps to the maximum allowed under the Oil-for-Food Program. The result: Oil prices suddenly dive-bomb. Up, down, up, down. Saddam was out of control. “Control is what it’s all about,” one oilman told me. “It’s not about getting the oil, it’s about controlling oil’s price.” Length: 1:20:57