Apart from the weak international economy, there are issues of deteriorating competitiveness driven by domestic inflation and a rapidly appreciating euro; since the start of 2002 the euro has appreciated by 32 per cent and 14 per cent against the US dollar and sterling, respectively.
Arguably, however, this rise is related less to technology and the structure of underlying marginal costs and more to uncertainties about how quickly the new practices will be exploited to expand OPEC's productive capacity. Going forward, there is concern that OPEC may choose not to expand capacity adequately from their large proven reserves.