OPEC Power: Past And Present Essay

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In this paper, I am going to discuss how the oil cartel known as

OPEC (Organization of Petroleum Exporting Countries) impacted the

United States economy in the 1970’s, how the effects of this are still felt today, and how their power should continue to influence our thinking where foreign policy and energy policy are concerned. First I will explain what OPEC is, its history and how this concerns every citizen in the United States. Then I will discuss how leaders of the past dealt with the pressures concerning the further effects on the economy at the time, which brought to light the need for energy policy as well as pressing foreign policy issues that need to be addressed, as both are certainly
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Transportation has been the only growth sector for oil demand over the past twenty ears and will continue to be the principal reason for growing world oil demand in the next twenty years. Among all modes of transportation, highway vehicles continue to dominate transportation energy use and petroleum is the energy source of choice (89).
     The transportation sector was obviously the most affected by the 1973 oil embargo. Beginning in 1973, OPEC that at the time already had its dominant share of the world oil market, began to flex its muscles. The price of a barrel of crude oil quadrupled between 1973 and 1975. Particularly disruptive was the oil embargo that followed the Arab-Israeli war in 1973. The result was long lines at gas pumps-----rationing by waiting time rather than by price (Walton 616).
     This was to be known as the “energy crisis” and the increasing fear that the U.S. economy was stagnating. This experience touched off a debate on how to meet the “energy crisis.” Should it be through government actions—rationing, subsidies for the poor, and federal expenditures for new sources of energy—or by relying on market forces? Advocates of the price system held that higher prices would produce the most efficient results: higher prices would reduce demand (by making smaller, fuel-efficient cars more attractive, for example) and increase supplies.
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