Oil cartel OPEC is doing Australian families a huge favour because it is incapable of exercising market power.

Its members so desperately need the money that they have been ignoring production targets set by the organisation, aimed at stabilising the global market and raising prices.

OPEC members have been ignoring their own targets for 18 months and the result is an oil price that has plunged to six-year lows in Asia, and it is not likely to end any time soon.

The oil cartel, which accounts for roughly 40 per cent of the world’s production and supplies most of Asia, remains in disarray.

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It threw in the towel on Friday, deciding to abandon production limits, which is just one very positive development for oil consumers.

Iran, for so long under sanctions related to its nuclear program, has promised to lift production to four million barrels a day by the end of next year.

That is an increase of 20 per cent from current levels.

It is hard to see how OPEC can lift oil prices when adhering to production limits carries its own risks.

OPEC power sinks in flooded market

If OPEC cuts production and prices go up, it increases the viability of US shale oil producers who will boost production, so cutting production will not work.

This is all good news for families and motorists in the lead-up to Christmas, as lower petrol prices will free up some income to spend on other things.

Oil companies know consumers will not complain about pump prices as long as they see them fall.

But motorists should be complaining because, just like banks which fail to pass on a full cut in official interest rates, the oil companies are holding onto a higher share of the benefit.

Retail margins at the petrol pump have gone up and are the highest they have been at any time during the past year.

FuelTRAC fuel analyst Geoff Trotter said “15 years ago, oil companies claimed the retail margin was two cents a litre”.

“Now it is more than 20 cents a litre.”

The margins are even wider for diesel fuel.

– ABC