Economics - Opec

Energy Crisis (1970’s) states that the crisis officially began when the “Organization of Arab Petroleum Exporting Countries (OAPEC) reduced their petroleum production and proclaimed an embargo on oil shipments to the United States and the Netherlands, the main supporters of Israel.” They did

They formed the Organization of the Petroleum Exporting Countries, or OPEC. Since the OPEC was instated to protect the interests of oil producers, it could be seen as an example of regional integration. The OPEC is widely considered, throughout the world, as a cartel. This would be an intellectual misconception. The concept of cartel would consider oligarchies limiting competition and monopolies increasing prices. Oppositely, many international oil producers are not members of the OPEC. These non-members saw a fourfold increase in the oil prices, during the 1973 oil embargo. In A history of the modern Middle East, William L. Cleveland and Martin Bunton stated that the immediate objective of the OPEC was “to utilize the collective bargaining power of its member states to pressure the Western oil companies to increase oil prices.”. However, the birth of the OPEC did not occur, overnight. In 1947, the Venezuelan and Iranian delegations held talks in Washington, to coordinate their oil policies. In OPEC: Past and Present, Abdul Amir Q. Kubbah stated that the Arab league had a project of creating an “association of Arab oil-producing countries.”, since 1945. The first OPEC-type grouping occurred in 1953, when Iraqi and Saudi delegates joined forces. The agreement between these two states was the first to involve cooperation from both governments. The Arab League held a summit in Cairo, in 1959. During that summit, “views have been exchanged concerning the

In 1973, an oil crisis began when the members of the OAPEC (consisting of the Arab members of OPEC, plus Egypt, Syria and Tunisia) proclaimed an oil embargo in response to the United States decision to resupply the Israeli military during the Yom Kippur War. The embargo happened when 85% of American workers had to drive to work every day. President

During the sixties, economic prosperity and growth enabled citizens of the United States to gain ownership of homes, ownership of automobiles, and access to higher education. However, during the seventies, the Organization of Petroleum Exporting Countries’ (OPEC) created an oil embargo which doubled the price of oil and created a long period of inflation in the United States. As a result, the upward

Benjamin Sovacool explains in his article that over the period of twelve years, the United States shale gas production increased 24.5 times the amount it produced in 1998. From 0.2 trillion cubic feet to an enormous 4.9 trillion cubic feet. Natural gas is also a huge financial benefit to North America. Before this drastic increase of fracking and natural gas production, the United States imported a clear majority of its oil and energy sources from the Middle East. This caused the middle east to obtain a control over the United States economic situation. For example, the 1979 oil embargo caused by OPEC (organization of petroleum exporting countries). According to Kimberly Amadeo, their decision to increase oil prices by a meager ten percent, caused oil rationing in the United States and worsened the already declining economy at this time. Since the increase in fracking and natural gas production, the U.S. has become decreasingly reliant on imported energy sources. Richard Janson denotes, that the impact of this influx of cheap gas has had many positive impacts on not only the economics of the energy industry, but foreign policy and the United States domestic policy. With the downfall in the need for imports for energy and the rise of hydraulic

Several oil-countries have been facing economic and political turbulence as a result of the crash in oil prices, and there is disagreement among OPEC as how to handle the situation. (Krauss) While this is happening, America’s oil production continues to rise, as it inches closer to becoming an energy superpower in production and consumption; and countries that depend on their oil exports face recession.

The Watergate scandal 1970 led to the discovery of multiple abuses of power by the Nixon administration, articles of impeachment, and the resignation of Nixon as President of the United States in August 1974. General Ford succeeded President Nixon until President Carter’s Inaugural Address on January 20th, 1977. Domestic economic complications that Ford and Carter faced were increases in gasoline prices due the U.S.’s heavy dependence on the Organization of Petroleum Exporting Countries (OPEC)—a cartel of Middle Eastern oil-producing nations—for its energy supply. In both 1973 and 1976, OPEC drastically raised the price of crude oil. This caused gas shortages around the world. In his Inaugural address, Carter promised to tackle the rising

The embargo of oil shipments to the United States by the Organization of the Petroleum Exporting Countries (OPEC) resulted in a widespread national energy crisis which, to some degree, created the economic downturn.

In addition to the US peak oil situation, the US Oil Drilling and Gas Extraction Industry faces heavy foreign market competition. In 2011, the US ranked 3rd in oil production, behind Saudi Arabia and Russia (Energy, 2012). Saudi Arabia’s OPEC governor expects Saudi output to rise steadily beyond 2030 with a 1.5 million barrel per day spare production capacity then (Energy, 2012). Russia holds the world’s largest

In a revealing article by George Perry (2001) the author discusses the economic impact that a disruption in the oil supplies would have on world oil prices. He states “Currently 28 percent of the world's crude oil comes from the Organization of Arab Petroleum Exporting Countries (OAPEC) consisting of Arab Muslim nations, some of which are not part of the OPEC cartel. The governing regimes in all these countries are at some risk [due to the war on terrorism].” He goes on to state that in a worst case scenario the economic consequences of oil supply disruption would be “oil prices rise to $161 per barrel driving gasoline price to $4.84 per gallon. The increase in the nation's bill for products of crude oil rises by about 10 percent of GDP, which adds perhaps 15 percent to the inflation rate in the first year. And the recession is the steepest and deepest of the postwar period, with GDP declining nearly 5 percent the first year.”

Since the oil embargo of 1977, there has been an increased awareness of our nation's energy security. As global population and energy consumption rise, the need for a stable energy supply has become a hot topic and a politically volatile issue. As our negative trade balance grows larger by the day, the United States finds itself in a rather precarious position. We are becoming more and more dependent on Middle East oil.

Unlike the 1970s, when the U.S. was held at bay by OPEC withholding oil production for political reasons, the growth of

on this years by providing the oil gap cause for the OPEC embargo to those

Exportation of United States’ crude oil has recently become a major topic of debate due to enhanced oil discovering techniques. These new production and extraction methods have been developed to fully produce reservoirs across the country. Since 1973, the United States’ government has placed rigid restrictions on the exportation of crude oil produced within the country (Johnson). These restrictions have prohibited the sale of U.S. crude oil to foreign markets (with some exceptions). President Richard Nixon proposed these bans under the 1973 Oil Embargo Act (Worstall). This act was used to promote energy security across the U.S. after the “first oil shock” occurred globally (Muffin). Well over 40 years later, the energy sector is still defined by this embargo act. “…it has become an anachronism at a time when the United States is one of the world’s biggest oil producers.” (Johnson) This has led many people to question the validity of the existing restrictions placed on crude oil exports. It has also sparked a substantial push for innovation and reform within the oil industry.

According to Domm (2013), the author of the first article, apart from the unrest in Egypt, several other factors such as a plunge in the inventories of domestic crude oil could drive up demand and in the end trigger an increase in the price of gas. In the opinion of the author, although the problems facing Egypt (and Libya) have affected supply