Producer Symbolism) at that time, the oil balance of these countries was not as critical as it is today, and they were not really depending on "foreign" oil. The entire situation changed with the October War which started shortly after midday on Saturday, October 6, 1973 with a concerted attack by Egypt and Syria on Israel. (Oil Price History and Analysis)
At the same time, one has to remember three important factors regarding the situation in 1973 embargo. The first of these points is that the evolution of the situation to an embargo was not a surprise to any of the Western nations. United States and its allies had been receiving warnings from different Arab countries months before the embargo took place, and the embargo was not for any economic reasons. The second point was that there had been an energy crisis in United States for a long period before the embargo occurred and this had been mentioned by the then President, Richard Nixon. He had given a speech six months before the embargo regarding the energy shortages in United States. The third point is that the major supplier to the United States, Saudi Arabia did not want the imposition of the oil embargo in 1973. (the Failure of the Oil Weapon: Consumer Nationalism vs. Producer Symbolism)
1973 October War:
Even in the Arab region, the imposition of an embargo was not new and the producing countries had used oil as a political weapon against the Western countries in 1956, 1967 and 1973. The funny situation is that the leaders of these political efforts in those years were led by Saudi Arabia and Kuwait - the friends of United States. The aim at that time was to force countries supporting Israel to change the political stand and compel Israel to vacate the land that it had occupied during the war in 1967. (the Failure of the Oil Weapon: Consumer Nationalism vs. Producer Symbolism) the actual war started on the holiest day of the Jewish calendar, Yom Kippur. This is the day that Jews are supposed to be in synagogues for prayers and fasts. As the chosen date was a surprise, Egypt had success and managed to cross the Suez Canal and the Syrians took Golan Heights on the day after the start of the War. The tide of the war started changing after October 10th when the forces of Israel were able to go even beyond 10 kilometers of the line established in 1967 due to cease fire. (Israel and Zionism: October War: 1973)
On the Egyptian side, the Israeli victory was even more spectacular and on 14th October they crossed the Suez Canal and ended up surrounding the Egyptian Third Army. The continued fighting brought in international trouble and the two arch rivals of United States and USSR were on the point of engaging in a battle. In the meantime, a ceasefire agreement had been approved on 22nd and that had not stopped the war. At the end there was a United States and Soviet joint resolution calling for ceasefire in the United Nations that was approved by all parties on 26th of October. (Israel and Zionism: October War: 1973) it had been assumed that a joint effort by consumer nationalism and producer symbolism that "oil weapon" can achieve short-term economic goals, but it cannot achieve political goals. The importance of economic goals cannot be ignored. In the case of this war, the members of OPEC had increased the prices by 70% a few days before the embargo was applied as also a few days before the war. (the Failure of the Oil Weapon: Consumer Nationalism vs. Producer Symbolism)
Inflation:
It is assumed that there is an impact of petroleum prices, but that is not necessarily true. Let us look at the situation in 1970 before the oil shocks came, gas lines started, the term stagflation became a part of common vocabulary and OPEC was considered an important player, the price of oil was $1.80 a barrel. This increased to $2.25 a barrel after two years and that included the effect of a presidential election and the efforts of Col. Mohammad Gaddafi withholding Libya's oil from the market. Then there was the important change with the war just mentioned, and the follow up with an embargo on oil...
The member nations of OPEC are relatively few, making it easier for them to form a producing conglomerate; the idea of a consumer conglomerate is untenable, as OPEC will always be able to find an extensive enough market for its commodity with other countries not in this conglomerate, and thus they can still control the price. Conclusion The oil industry is not fueled by supply or demand so much as it
(Tanner, 1) The tanker, which ran afoul of a support girding for the Bay Bridge, released the remarkable amount of oil into an area which is highly populated by plants, animals and people, and is also incidentally ensconced on three sides by the now tainted Pacific waters. In the immediate aftermath of the event, it was clear that such areas as San Francisco had taken the brunt of this poorly
It was in this backdrop of economic instability that economic nationalism also reared its ugly head. International crooks and foreign multinational companies rushed in and used both legal and illegal methods to gain contracts for supplying all sorts of stuff like stock fish, frozen chicken and meat, cars, and custom-made wine. Outlandish contracts were even given for supplying water and firewood to military barracks and prisons. Foreign governments and
This was the clear result of a tightening in supply, however. Another major fuel price shock occurred as a result of the Iranian Revolution and the subsequent Iran/Iraq War. This again caused a supply shock as two of the world's major oil producing nations were completely destabilized (Williams, 2007). In the 2000s, a number of factors have combined to drive up oil prices. Major economic gains in key, highly-populated developing
Oil Market & U.S. Economy In June 2008, when the price of oil had crossed $120 per barrel, the predictions for the impacts on the U.S. economy were dire. Whereas just months previous, prices were expected to top out at $100 before returning to a more reasonable equilibrium point (Schoen, 2007), now the potential of $200 barrel oil came to pass, bringing with it economic catastrophe (Biderman, 2008). The short version
But the basic rule of political economy may not be sufficient to best understand the matter; therefore, the problem will be analyzed within the international context. An additional cause, aside the diminishing resources compared against the increasing demand, could be given from within the United States and would materialize in an unstable economy and a weaker dollar, which is less trusted by the exporting countries. Then, the country possesses limited
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