Oil is another commodity where suppliers have worked together to control prices. The organization of the Petroleum Exporting Countries (OPEC), a group of 12 major oil-producing countries, has managed the supply of oil for over 50 years to try to control the price. This has reduced fluctuations in price for both producing and consuming countries, although when producers work together, the price tends to be higher than it would be if there was more competition. One effect of high oil prices is to encourage the development of other sources of energy. 'Fracking' involves obtaining gas or oil from shale rock using large quantities of water. There is considerable use of fracking in the US but there are environmental concerns, including air, water and noise pollution. Some countries have banned the technique. There are large reserves of shale gas in the UK and a firm has undertaken work to explore the possibility of fracking at a site recently. However, firms will need a license if they are to be allowed to begin this type of work in future.

(i) Commodities are vital as the raw materials and energy sources to make finished products. Should market forces be left to determine the price and output of these commodities or should governments intervene, and if so, which THREE policies that are most appropriate? (12 marks)

(ii) Does it matter if sellers with considerable market power set the price, particularly when commodity prices may change frequently otherwise? Explain your answer. (6 marks)

(iii) Explain how does OPEC influence the world price of oil? Give three conditions that are necessary for a cartel to be successful? (7marks)