Oil Industry In The 1970s

We will first look at the United State's roles in the world oil chain in order to more fully understand what the stakes are in this war of dependency. America holds 2% of the world's oil reserves, contributes 8% to the production of oil and consumes a staggering 33% of the total world consumption [3]. This is an amazing amount for just one country alone to consume. If we look at how economics are supposed to work we will find that supply needs to equal demand. Our supply does equal our demand currently, but is largely imported. Right now America is only supplying 8% of the global production, while taking a massive third of the total consumption. Our supply comes almost completely from overseas, meaning that major oil producers, such as Saudi Arabia or Iraq, control a major role in our economy. This is a major weakness to the US as we will have little control over this precious resource and we are at the hands and will of the suppliers. Below is a chart showing the breakdown of America's uses of oil by sector.

Oil suppliers dig deep down to the roots to analyze and derive concrete solutions to carry on the rising market. The force of fracking in the United States is lifting the economy; the system has been a political game changer for the nation, creating job opportunities and investing money into the community. The United States is currently capable of competing with the global marketplaces at a high rate. This coordination leads to knowledge for on-shoring manufacturing, which eliminates the dependency on foreign oil. This significant groundwork is driving opportunities for innovators. The abundant supply of oil and the inexpensive cost leads to cheaper energy for consumers (Dews, 2015). Along with the low price for refineries,

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

Currently, the United States is the largest importer of crude oil in the world, while it is only the 3rd largest producer. In 2013, while we imported 7.7 million barrels of oil a day, we only produced 7.5 million (Dakota Access). It is critical that we produce more and import less so we can be more self-sufficient in energy production and focus on our country’s economy, to benefit the American people.

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 1973, in the wake of conflict in the Middle East, US drivers were feeling the repercussions with every gallon of gasoline and oil that they consumed. The members of OPEC placed an oil embargo on the US and several other nations because of their aid to the Israeli military. This embargo greatly pressured the US, who was highly dependent on foreign oil. In the aftermath of this crisis, President Nixon called for the increased energy production to avoid this problem in the future. Yet, in this present day, the United States faces a similar, although not as extreme, situation. Measures must be made to make the United States energy independent.

The United States must re-examine many policies previously accepted as reasonable, especially its own national energy policy. As the largest overall and per capita energy consumer in the world, the U.S. needs to decide upon a reasonable source of energy for the foreseeable future, especially since its energy needs will increase dramatically during that time. With political instability likely to remain the norm in the Middle East, oil continues to be an energy source of questionable reliability; in addition, current estimates of worldwide reserves suggest we may in fact run out of oil entirely in the next fifty years. Natural gas reserves are in fairly short supply too, and costs limit its

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.

In January 2016, the cost of a gallon of gas dropped below two dollars, and consumers were rejoicing. Driving that car with twelve miles to the gallon car wasn’t so bad. Going to the grocery store was a little cheaper because of the transportation costs of goods. Americans could afford a like extra and never wonder about why the gas dropped. We were still hurting from three dollars or more for a gallon. Companies in the United States started drilling for oil on American soil in larger quantities than before two years earlier in 2014. Jobs in the industry were aplenty. Young adults straight out of high school could go into training for a year and come out making six figures by they were twenty-five. The amount of oil produced was

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

On April 29, 1974, the New York Times ran an article titled “For Gasoline, Little Is Certain But High Prices,” which began with an 18-year-old nursing student from Westchester, NY panicking at the long line in front of the gas station just to get the fuel to commute for class. “Miss Galgano…had been trying since 7 A.M. to get enough fuel.” The dire yet cruel reality of a shortage meant that gas stations had to close down “four lines on [her],” along with millions of other Americans waiting on line for hours. The piece was a vividly jarring depiction of the first ever oil supply shortage since the end of the war. The shortage was blamed on the embargo the Organization of the Petroleum Exporting Countries (OPEC) initiated in 1973, when President

Fuels for oil, heating, energy, and generation. Oil is also used to invent materials useful for daily lives. For 40 years the U.S. government had abandoned on U.S. oil exports. The government with the president of the Obama administration move to release that ban. A courageous move that leads Congress to discuss the energy policy in America. Two Texas oil and gas producing companies were given permission to send oil as jet and motor fuel. Because of the Arab embargo act that took place during the 1970’s the Government thus far has banned oil overseas. Members of Congress resist the change in policy on exports in the United States, mainly because gasoline prices averaged about $3.80 a gallon after a rise in oil prices. The United States today gets most of its imported oil from Latin America and Canada. Although today some may not know that now America imports about the same amount of oil from Africa than from the Persian Gulf. Now the US turned out to be one of the largest oil producers in the

In the previous time periods discussed its hard to formally prove that structural change has taken place in a quantative way. The oil shocks of 1973 and 1979 provide our best opportunity to definitely prove structural change has taken place in the time series data of oil prices. This is where we will start before moving onto modeling the behaviour of OPEC during this time and discussing their role in the shocks.

The organization was established on September 14, 1960, at the Baghdad Conference that was comprised five countries; Saudi Arabia, Iran, Iraq, Kuwait, and Venezuela. It was later joined by several countries at different times of its existence. In the 1960s, most of the developing countries were in a transition time and were acquiring independence. It was during this time that OPEC set its vision and objectives through the first Secretariat in 1965 in Geneva. In the 1970s, the organization met the first challenge when the oil prices become highly volatile following the 1973 Arab oil embargo. This led to member groups adopting a socio-economic development