Pod Insights Planet Money The secret meeting that launched OPEC About this episode Recently, a listener wrote in with a question about OPEC and oil prices. She was prepping for a camping trip… thinking about how much it costs to fill up her diesel-guzzling camper van at the pump.
“It would be so awesome if you guys could do an episode explaining OPEC to us,” she emailed us. She wanted to know: why does OPEC exist? Why does it limit the supply of oil? And now that the United Arab Emirates has dropped out, what will happen to gas prices?
We love when our listeners write in (and send us voice notes!). The simplest questions can reveal how the complicated web of the economy works.
On our latest: we answer our listener’s questions… and the questions behind those questions!
Related episodes:
• Chevron, Venezuela and the Paradox of Plenty https://www.npr.org/2026/01/16/nx-s1-5680400/chevron-venezuela-oil-industry-petrostate
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0:17 Speaker 01 This is Planet Money from NPR.
0:22 Speaker 02 We here at Planet Money are firm believers in the saying, there's no such thing as a dumb question. Because even the most simple questions can lead to incredibly intricate answers that reveal how the economy works. So we get especially excited when y'all come to us with questions that you feel like you should already know the answers to. Like, the other day, we got a question from a listener named Valerie Berecki, who at first didn't even want us mentioning her name.
0:52 Speaker 03 Ah, I have a lot of friends that listen to NPR, specifically Planet Money, and I think it's embarrassing when you don't know the answer to what should be a basic question every American should know, in my opinion.
1:07 Speaker 02 That is not true at all.
1:10 Speaker 02 That's like, my whole job is to not know the answers to questions and then figure them out.
1:18 Speaker 03 I don't know.
1:19 Speaker 02 Luckily, Valerie got over it. She told us she thought of her question while prepping for a camping trip. She has a diesel-guzzling camper van and had a question related to how much it costs to fill up at the pump. So she whipped out her phone and started talking into it. Voice to text, pressed send. And when her email landed in our inbox, it read,
1:41 Speaker 02 "I, Planet, honey." I gotta kick out of that.
1:44 Speaker 03 That's not what I said. That's what voice to text said.
1:49 Speaker 02 What did you say?
1:51 Speaker 03 Hi, Planet Money. It would be so awesome if you guys could do an episode explaining OPEC to us like we're five years old.
1:58 Speaker 02 I have an almost five-year-old who definitely has never heard of the organization of the petroleum exporting countries. Not sure she knows what gas is either. And Valerie's question gets more advanced real fast. She asked what OPEC does to make oil prices go up or down.
2:14 Speaker 03 In general, I understand they exist to keep supply low in order to keep prices higher. But I don't understand why, what, when, how, why keep prices high?
2:23 Speaker 02 Love it. All right, I am going to try to answer as many of those questions as possible. I will do my best.
2:30 Speaker 03 Awesome.
2:31 Speaker 02 Hello and welcome to Planet Money's maybe regularly occurring series, Everything You Wanted to Know About What Is OPEC? But We're Too Afraid to Ask. I'm Nick Fountain. Today on the show, we're going to track down the answers to Valerie's questions. What is OPEC? Why does it exist? How and why does it control oil prices? And why did the United Arab Emirates just leave OPEC?
2:54 Speaker 03 You know what else I thought would be interesting to know?
2:57 Speaker 02 What?
2:57 Speaker 03 Can you actually expect to see gas prices fall at some point in time, given the UAE departure?
3:03 Speaker 02 All right, good luck on the camping trip. Thank you so much.
3:06 Speaker 03 Thank you.
3:06 Speaker 02 Bye, bye.
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4:00 Speaker 00 This episode's sponsor is HubSpot, which offers the following message. What if instead of updating your CRM, your CRM updated you? No catching up on manual edits, no more guesswork. HubSpot's self-updating CRM keeps your customer context current and helps you understand what to do next. So, marketing builds more demand, sales wins more deals, and customers keep coming back. Learn more at hubspot.com.
4:26 Speaker 02 All right, let's do this. Our first two questions, courtesy of listener Valerie. What is OPEC? And why does it exist? The simplest answer? It's a group of oil states that have huge sway over oil markets because they decide together how much to pump. But there is so much more. Starting with a great story about why OPEC exists, which involves a secret meeting under a tree on the banks of the Nile. This meeting happened in 1959. And the reason it happened had to do with who controlled the oil market at the time, which was not the countries that had the most oil, you know, the Saudi Arabia and Venezuelas of the world, who controlled the oil markets
5:10 Speaker 02 was the American and European companies that were drilling in those countries. And those companies, which included the likes of Gulf and Shell and Texco, you might remember from our recent show about Venezuelan oil, had a pretty cool nickname. The Seven Sisters. So, the Seven Sisters were the huge companies that were extracting oil from the oil states. And as the name implies, the Seven Sisters were awfully close. They were separate businesses, but they coordinated how they dealt with the oil states. They divvied up who got to drill and where. They even decided the price they would pay countries for their oil. And that is why OPEC was hatched, essentially as a response
5:55 Speaker 02 to this kind of a cartel. Because the countries whose oil was being pumped were like, why don't we have more control over the price of our oil? This is where the secret meeting comes in. To set the stage, picture if you will, Cairo 1959, the Hilton, which is this gleaming hotel covered in turquoise tiles. And at that hotel are guests of what was called the Arab Petroleum Congress, basically a who's who of international oil executives and a bunch of oil ministers. Was it mostly men?
6:29 Speaker 05 Oh, almost all men.
6:31 Speaker 02 This is Anna Rubino, who's a biographer. Okay, so into this--
6:35 Speaker 05 Into this sea of men--
6:37 Speaker 02 Walks whom?
6:37 Speaker 05 Walks Wanda Jablonsky, who is this petite blond woman with big eyes, very elegant, very put together, and she knew basically everybody in the room. Wanda Jablonsky was the most powerful woman in the international oil world for decades.
6:59 Speaker 02 Wanda died in 1992. Luckily for us, Anna, who worked for Wanda, ended up writing the book on her, and that's why we have this story.
7:08 Speaker 05 I'm delighted that you're interested in Wanda.
7:11 Speaker 02 Wanda was, among other things, an investigative journalist, a power broker, the publisher of a newsletter called Petroleum Intelligence Weekly. And when we say newsletter, we're not talking about one of those new-fangled substacks.
7:25 Speaker 05 It was considered the bible of the oil industry.
7:27 Speaker 02 Bible of the oil industry.
7:28 Speaker 05 The bible of the oil industry. It was printed on this very thin, at the time called bible paper, so that it could be mailed, airmail, for the lowest cost, and so that it could be folded and fit into a man's suit jacket pocket.
7:46 Speaker 02 [laughing]
7:48 Speaker 05 And she would go around to any meeting she had with oil folks, and she would slip this into their jacket pocket.
7:56 Speaker 02 To hear Anna's telling of it, Wanda's reporting revealed the secretive ways the Seven Sisters were extracting wealth from the oil states, like little accounting tricks.
8:06 Speaker 05 This was where Wanda actually was so useful and helpful to many of these young sheiks and leaders in learning about the economics of oil, learning about the secrets, the mysteries, actually, of how these Seven Sisters were running the show.
8:26 Speaker 02 Which brings us back to the conference, the one where Wanda walked into the sea of men. Just before the conference, the Seven Sisters decided-- We're going to start paying less for oil. And the oil ministers of the countries that produce that oil.
8:42 Speaker 05 Are just furious because they've not been notified of this cut in the price of oil, which means their royalties are going to go down. And frustrated with that and the fact they know, thanks to reading Wanda Jablonski's articles, that they're really losing out on a lot of the profits that the oil companies are pocketing, they want to do something about it.
9:02 Speaker 02 So that's the context going into this meeting. And Wanda, she knows all the players, including the two men maybe most amped to do something about this Seven Sisters sort of cartel, the oil minister of Venezuela and the oil minister of Saudi Arabia.
9:20 Speaker 05 And she introduces the two of them. And she said they would have met anyway, but she introduces the two of them. And in the stories that she would tell, it would be either over, she'd say that it would be either over Coke or over whiskey, depending on her audience.
9:35 Speaker 02 Coke or soda, not that other thing. The men arranged a secret meeting at an empty yacht club outside of town. They invited other officials from Kuwait, Iraq, Egypt, Iran. To avoid the prying eyes and ears of the Seven Sisters, they all drove in separate cars and met under a tree on the banks of the Nile.
9:57 Speaker 05 It was a James Bond atmosphere.
9:59 Speaker 02 A bunch of guys in, in black suits.
10:02 Speaker 05 Right.
10:02 Speaker 02 Meeting.
10:03 Speaker 05 Outside, under a tree because they were so suspicious, they were so worried about being, you know, spied on.
10:10 Speaker 02 It was right then and there that they came to an agreement. They were going to try to band together and wrest control back from the sort of cartel that was the Seven Sisters with an organization of their own. So that as an association of oil states, they could have more of a say over how much they sold their oil for. This organization would eventually come to be known as OPEC, the Organization of the Petroleum Exporting Countries. And Wanda.
10:43 Speaker 05 She came to be known as. The midwife of OPEC.
10:48 Speaker 02 The midwife of OPEC?
10:51 Speaker 05 Yeah.
10:52 Speaker 02 A little dated, but we'll take it.
10:53 Speaker 05 Or, yes, another, another phrase that she was also called was OPEC's matchmaker.
11:00 Speaker 02 So that is the what and why of OPEC. An organization of the biggest oil countries that got together in order to fight back against the Seven Sisters, this sort of cartel of oil companies. And at first, the OPEC countries thought they would wield their power by negotiating, kind of like collective bargaining for better contracts.
11:22 Speaker 05 It was, in effect, more of a consultative body than it was an organization that had any impact on the price of oil.
11:31 Speaker 02 It was a grievance organization?
11:33 Speaker 05 Yeah, that's actually a good way of putting it. They did have grievances. They were trying to figure out a way to negotiate with the major oil companies, but the major oil companies wouldn't meet with them.
11:46 Speaker 02 Or at least wouldn't give them what they wanted. The power was still with the oil companies. And OPEC was kind of just an industry group. It would be more than a decade before OPEC countries would realize their power. Together, they could control oil prices. Which gets us to our next question from listener Valerie. Why and how did OPEC start to control oil prices?
12:14 Speaker 03 Why, what, when, how?
12:16 Speaker 02 Why, what, when, how did OPEC start to control oil prices? Well, it turns out, there was kind of a breakout moment.
12:24 Speaker 06 It is an all-out war.
12:26 Speaker 02 October 1973, when Egypt and Syria attacked Israeli forces.
12:31 Speaker 06 The surprise attacks came early this morning, in the air and on the ground.
12:36 Speaker 02 Shortly after the war started, the US sent plane loads of arms and supplies to support Israel. And a group of the Arab oil-producing countries did not like this. To show their disapproval, they did two things. One, they said, none of our oil is going to go to the supporters of Israel, especially the US. Became known as the Arab Oil Embargo. And this was not OPEC, by the way. It was a smaller group. But the second thing they did, and the more important, was to limit the amount of oil they even pumped out of the ground. And that is because the US wasn't only buying oil from this group of countries. So even with the embargo, they could get the global market rate for oil elsewhere.
13:20 Speaker 02 If these countries really wanted to put pressure on the US and these other countries, they needed to reduce the total amount of oil in circulation. So they said they were going to cut production 5% every month as long as the war continued.
13:34 Speaker 05 It was the biggest, the biggest economic shock the world has ever seen. Because the price of oil went from $3 a barrel to $12 a barrel almost overnight. And in the United States, we ended up with long gas lines. How long have you been waiting in line? About five minutes.
13:56 Speaker 07 I just cut in front of a whole bunch of people. Did that guy behind you tell you that he cut into the line? Twice I got out and talked to him. And he's just so obnoxious. He's so blatant about it, you know?
14:07 Speaker 02 Now, as we mentioned, the embargo and production cuts wasn't an OPEC policy. It was just some countries. But OPEC members learned a lesson from it. Their power was not in expressing their grievances or trying to negotiate. They could control the market by banding together and limiting supply. At this point, OPEC countries were producing more than half of the world's oil. So the answer to listener Valerie's question about why and how OPEC controls prices comes from that insight, that their power lies in collectively controlling supply. But, and this is more evidence of how intricate the answers to simple questions can be.
14:52 Speaker 02 It turns out, doing anything collectively is very, very hard, especially when it has to do with money.
15:01 Speaker 05 OPEC's power lies in acting together and actually sticking to what they're saying that they're going to do. The thing that's very hard is doing that over a long period of time.
15:14 Speaker 02 To hear about that, about how hard it is to keep the gang together and control how much money they get for their oil, we called up the ultimate OPEC insider, Ibrahim Almohana. How many OPEC meetings have you been to?
15:27 Speaker 06 Oh, so many, so many.
15:29 Speaker 02 Hundreds?
15:29 Speaker 06 More than that.
15:31 Speaker 02 Thousands?
15:32 Speaker 06 No, I doubt that. I doubt.
15:35 Speaker 02 Ibrahim's job for nearly four decades was advising Saudi Arabia's oil ministers. He's been called the Saudi oil whisperer. And part of his work was to try to move the oil market kind of on vibes by convincing oil traders and journalists to see the market the way he saw it, or the way he wanted them to see it. So if you want the price to go up, what do you do? How do you message that?
15:58 Speaker 06 I am not going to tell you.
16:01 Speaker 02 If you want the price to go down, how do you say that?
16:03 Speaker 06 No, no, no, listen. No.
16:06 Speaker 02 Ibrahim keeps his tricks close to the chest. But talking to him, I got a better understanding of why OPEC would want to control the price of oil, which listener Valerie had asked.
16:16 Speaker 03 Why keep prices high?
16:18 Speaker 02 Now, OPEC doesn't necessarily want to keep prices high. Too high, people might switch to more efficient cars or electric cars. What they want to do is maximize their profits, of course, though they never really say this out loud. What they do say is that they want to manage supply, smooth the market. Ibrahim told me that oil, like many commodities, has these huge boom-bust cycles, where the price of oil rises, companies drill more, explore more, and pump more. And then there's too much oil and the price plummets. And OPEC, according to Ibrahim, just wants to smooth this cycle out, make it less painful for producers and consumers. But of course, they want to control the price, too. That's
17:03 Speaker 02 the whole point of OPEC. And the tactic OPEC eventually figures out comes from the lesson of the Arab oil embargo. You can control prices by controlling supply.
17:17 Speaker 02 So that is what the OPEC countries started doing altogether as a block, production quotas.
17:24 Speaker 06 The quota introduced in 1982.
17:27 Speaker 02 Okay.
17:28 Speaker 06 And for all countries, there were quota.
17:31 Speaker 02 And if this sounds like a cartel to you, colluding to set production quotas in order to control prices, I agree. Is it a cartel?
17:41 Speaker 06 No, no.
17:42 Speaker 02 Come on.
17:43 Speaker 06 No, no, no, no. It is a management. You need it.
17:47 Speaker 02 Ibrahim says they were trying to manage supply, not set the price. Each member country was selling their oil on the open market. But regardless, starting in the early 80s, every OPEC member agreed to a quota, a limit to the amount of oil they pumped out of the ground, except Saudi Arabia.
18:06 Speaker 06 Saudi Arabia decided, I don't need a quota.
18:11 Speaker 02 Ah.
18:12 Speaker 06 And they said, I will be the swinging producer.
18:16 Speaker 02 Swinging producer, AKA the swing producer. And this is really important. Having a swing producer, one member who's not strictly following quotas, is a way to finesse the smoothing OPEC was trying to do. Basically, if oil prices rise or drop, a swing producer can quickly ramp up or ramp down production to keep the oil price and market steady. And Saudi Arabia was the obvious candidate to be the swing producer because they have an ungodly amount of oil. You can just kind of tap the Saudi desert floor a few times and oil gushes out. So in 1983, they agreed to smooth oil prices for the OPEC countries by swinging their production,
18:57 Speaker 02 adjusting their output to keep prices steady. And that may seem like an enviable position because when prices get too high, you get to pump more and sell it at a nice price in order to bring prices down?
19:11 Speaker 06 In a good time, it's good. Bad time, it's really worse.
19:15 Speaker 02 Yeah, in bad times, Ibrahim says, being the swing producer really is worse because when prices are down, you gotta pump less and you make less. So you're basically dealing with the boom and bust cycle all on your own. And then there was a bigger problem that Ibrahim says Saudi Arabia started to notice. As soon as the quotas were imposed, it became very tempting to skirt them. All those countries sitting there with that sweet, sweet or sour, sour crude, ready to pump, selling it at that high price really looks tempting. What if we just pumped a little bit more than our quota? Who'd know?
19:56 Speaker 06 Some other countries were not really willing to find a joint solution.
20:02 Speaker 02 So they were cheating on their quotas?
20:04 Speaker 06 Yes, some of them, yes, they did.
20:06 Speaker 02 Was that a big problem?
20:07 Speaker 06 It was a major problem.
20:09 Speaker 02 OPEC didn't have a solid way to police countries on their quotas. And so countries would cheat, often. They're being essentially free riders.
20:18 Speaker 06 Absolutely. Some countries continue until today, all the time.
20:24 Speaker 02 Do Saudis look down on the cheaters and say, ah?
20:27 Speaker 06 Yes, yes, yes.
20:29 Speaker 02 And all that cheating, it eventually ticked off Saudi Arabia so much that they decided in 1985 to show everyone who was boss and just flood the market with oil. And that crashed the price of oil everywhere. It got so low that in the spring of 1986, some gas stations were slinging gallons for pennies. Cheap gas, real cheap gas. 19 cents is a heck of a lot cheaper than it usually is. That's right, 19 cents a gallon, the low price part of it. For a second there, OPEC was in disarray. But it did not die. OPEC rebuilt the quota system, added some members, regained their status as the most important player in the
21:08 Speaker 02 global oil market. But recently, their power has waned. Among other things, the US is now producing a ton of oil, which means OPEC is a smaller player. And that, plus the normal cartel dynamics of everyone cheating, plus the war in Iran, has made keeping the gang all together harder than ever. And that is part of the answer to the last piece of our listener Valerie's question. Basically, what's up with the United Arab Emirates ditching OPEC? We're going to tackle that bit after the break.
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22:46 Speaker 02 So, the reason listener Valerie emailed us in the first place was, of course, because the United Arab Emirates, home to Dubai, Abu Dhabi, a bunch of oil wealth, recently decided to leave OPEC. They left at the beginning of the month. Why? And what will this mean for Valerie when she's at the pump trying to fill up her diesel camper van? For more on that, we called up legendary OPEC watcher Kate Durian. Kate lived in the UAE for almost two decades, went to nearly every OPEC meeting for even longer. She even brought her son along to some. I think they had a sort of junior OPEC reporter badge made for him. Apparently, her son picked up the trade pretty quickly. One time, he yelled at the Saudi oil minister. "Are you going to change the price of oil?" And everybody laughed.
23:31 Speaker 02 You know, it's like, nobody would dare ask the minister that question. Little guy had a lot to learn. OPEC isn't a cartel. It's just a supply management organization. The Saudi oil minister doesn't control the price of oil. He just, anyways, wrong question. The question at hand, why did the UAE leave OPEC? Kate says the UAE is an interesting case. Recently, they've been grappling with this problem that honestly, all oil-producing nations have to confront. It's called the green paradox, which is as the globe decarbonizes, the incentive for oil producers is to pump more, pump as much as possible so they can get as much money
24:14 Speaker 02 for their oil right now before demand collapses. So the UAE, along with trying to diversify their economy by becoming a financial hub and investing in data centers and aviation, has been wanting to increase their production. But OPEC has been holding them back, saying, no, stick to your quota. What was the first sign that you saw that the UAE might not be happy with this situation, ship?
24:43 Speaker 01 Well, you know, when you cover the Middle East, and I've been doing it for, God, decades, you have to read tea leaves, you know? You've got to look at the little nuances because they don't come out and say it, right?
24:56 Speaker 02 Kate says she's seen tensions for years in those tea leaves. Like, the Saudi Crown Prince and the Abu Dhabi Crown Prince stopped going out of their way to say nice things about each other. And, maybe more importantly, the Emiratis started complaining more and more about their quota, which wasn't increasing, even though they'd made all these investments in their oil fields and vastly increased their production capacity. They were basically saying, we've grown up. Stop treating us like the little brother. Kate says things really came to a head in 2021. She was covering the OPEC meeting. Saudi Arabia proposed modest increases to quotas, but based on old production capacities.
25:37 Speaker 01 And the Emirati said, no, we're not taking this because you're using a baseline from back in 2018, when our capacity was much lower. We have higher capacity now. We want a higher production quota. And so they scuttled the agreement, and it became public.
25:53 Speaker 02 In a really serious way. The oil ministers did dueling TV appearances. And Kate was thinking.
25:59 Speaker 01 Hang on, this is very unusual. These countries don't know. Normally argue in public, they try to do it behind closed doors.
26:06 Speaker 02 The stalemate lasted weeks and it got nasty. Saudi Arabia even banned flights from the UAE. Eventually, everyone figured out a way to save face. The UAE got higher quotas, but to keen tea leaf readers like Kate, it was clear. The UAE wanted out. And after the US and Israel started a war with Iran and Iran, a fellow OPEC member started bombing the UAE, that's when they finally said, see you later. The UAE left OPEC. That thing we told you about how hard it is to keep a cartel together? We're seeing it happen in real time. Now, what does that mean for Valerie's summer camping budget? The whole reason we're doing this episode is because we got a question from a listener,
26:51 Speaker 02 Valerie, who asked us, can we expect to see gas prices fall at some point, given the UAE's departure? Do you have an answer to that?
27:02 Speaker 01 No. I mean, how much more can they produce?
27:06 Speaker 02 This is the thing. Iran's blocking of the Strait of Hormuz has prevented a large portion of Emirati oil from even leaving the country. So Kate says the UAE leaving OPEC isn't going to have much of an effect right now.
27:18 Speaker 01 The only way you're going to get gas prices to come down is if the strait reopens, if everything returns to normal.
27:24 Speaker 02 Oh, sure, but after the strait opens.
27:26 Speaker 01 After the strait opens, you know what's going to happen? Your stocks, you have to rebuild stocks and people are going to be rebuilding stocks.
27:32 Speaker 02 Countries will refill their strategic reserves. Companies will refill their tanks, their tankers, their refineries. But it's going to take a long time to get back to normal.
27:43 Speaker 01 You know how much we've lost so far? We've lost 700 million barrels. At the loss of 10 million barrels a day, if you multiply it, we're going to get to a billion. I mean, that's a billion barrels. It's going to be, it's going to take a while for.
27:58 Speaker 02 All these tankers to be taken out to to sort of get to their destinations. It's really not going to happen overnight. Prices will come off, but they're not going to come off to an extent that, you know, that's going to make a huge difference. In short, Kate doesn't think there's any major relief coming anytime soon. And even after things do get back to normal and the UAE gets to sell as much oil as it wants, no quotas, it'll only add about 1.5% to the world's overall oil supply. So, listener Valerie, will prices at the pump go down? Kind of depends on how OPEC responds. Do they want a punishing price war with the UAE?
28:41 Speaker 02 Or do they want to keep the price high? Collectively, they're going to have to decide. You know how Wanda Jablonski had the go-to newsletter for oil for decades? Now our friends over at The Indicator have launched the go-to newsletter for fun economic insights of the 2020s. It's not on Bible paper. You can't tuck it into a suit pocket, but you can find it in your email inbox if you subscribe at npr.org/indicatornewsletter. You won't regret it. If you have a question about how the world works, even if you're embarrassed you have it, please send it to us. Our email is [email protected] .
29:25 Speaker 02 This episode of Planet Money was produced by James Sneed with help from Willa Rubin. It was edited by Marian McCune, fact-checked by Sierra Juarez, and engineered by Robert Rodriguez. Alex Goldmark is our executive producer. Few book recommendations. Anna's book about Wanda is called Queen of the Oil Club. Ibrahim has a book where he reveals more secrets than he would tell us. It's called Oil Leaders. And the greatest book ever on oil is Daniel Jurgens' The Prize. I couldn't have done this show without it. I'm Nick Fountain. This is NPR. Thanks for listening and thank you for asking, Valerie.
30:02 Speaker 04 Stay tuned for the following announcements and messages from our sponsors. This message comes from Mint Mobile. Ditch overpriced wireless and get premium wireless for less. Go to mintmobile.com/switch to see which plan works for you. This message comes from Google Workspace with Gemini. One subscription that does it all. Personalized AI and premium business versions of Gmail, Google Docs, Drive, and more. Try it free for 14 days at goo.gle/workspacewithgemini.
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