Opec And The Oil Field

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Before really understanding OPEC and the oil field, it is important to understand how they both began and what is currently occurring in the oil market. The production of oil has been around since the mid 1800’s here in the United States. In the late 1850’s, the first drilling rig made specifically for oil drilling was created by George Bissel and Edwin L. Drake. It was named the Drake well. Keep in mind that although this was the first oil drilling rig made, this is not the first time that someone had hit oil while drilling. In the other instances, the persons drilling were in search of salt or drinking water, and hit oil pockets as a side effect. After this significant event in history, the oil field has experienced many ups and…show more content…
It was founded by Kuwait, Iraq, Iran, Venezuela, and Saudi Arabia. Its sole purpose is to enact policies that set production limits for its member countries. Its goal is to maintain order among the countries. This would create fair prices for all of those countries who produce oil, as well as a steady supply to those countries who consume the oil. OPEC does not have complete control over the price of oil as the actual market influences that also (OPEC Fast Facts). These policies, production cuts and production increases also rely on the honor system between the countries. When production quotas are set, the countries all agree to abide by those quotas. If one country does not abide by the rules, there are no penalties that the country could face. On the other hand, countries will not produce very much over the quota in fear of being banned from OPEC. In the 1960’s, OPEC came into existence with the five original founding members. By the end of this decade, it had grown to ten members, which now included Qutar, Indonesia, Libya, United Arab Emirates and Algeria. By the 1970’s OPEC’s power and influence over the price of oil had grown immensely. It was at this time since OPEC had been in effect that we had really observed an increase in the price of oil per barrel. In 1973, the Yom Kippur War occurred against Israel, led by Egypt and Syria, which were part of the Arabian countries. The Arab’s struck back and enacted an embargo against any country who
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