FREE ESSAY ON YEAR WITHOUT OIL

YEAR WITHOUT OIL

Opec Oil Embargo
/
1973, The Year Without Oil
OPEC Oil Embargo
There are several things that come to mind when presented with the picture and topic, but
the one that stands out most is shortage. However, shortage is an ironic word to use for
it. It wasnOt really a shortage in the fact that the world is out of oil, which being a
non-renewable resource will be one day, but it was an incredible 130% increase in price
by OPEC, Organization of Petroleum Exporting Countries. This forced the petroleum market
to head into a tailspin.
OPEC, started by the major oil producing countries in the Middle East, was designed to
give price control to the oil producers, instead of the oil manufacturers. Formed in
1960, OPEC was only a middleman for 10 years, but in the 1970Os, they found the right
time to drive up the price of gas. One viewpoint can say it was about time that we
started paying these countries for what they were up to that point, giving us, but from
the other standpoint, OPEC is no more than a cartel and monopoly. A cartel is two or more
parties, the oil producing countries, hurting an innocent third party, oil consumers.
OPEC was created to hurt the oil manufacturers who were taking advantage of the oil
producers, but unfortunately the one that got hurt from the agreement are the oil selling
stations and us, the consumer.
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There are several reasons why it isnOt the manufacturers didnOt get affected by any of
the price raises. First of all, no matter how high the price of crude oil goes, the world
still has to keep buying oil products. In fact, the world is using more petroleum
products now than it ever has before, and can only get it from a few manufacturers, which
means a monopoly is feeding an oligopoly.
Monopolies are when the economy relies on one source for all of a product, also called a
trust. Monopolies are banned in the United States by Anti-Trust Laws. Oligopolies are
products, that the economy relies on, that are only available from a few sources. In a
large market, the oil market, these companies can raise prices for consumers and receive
massive increases in their profits.
To really understand the hardships that happened in the 1970Os, and not being around in
that time, we can look at the situation we are experiencing today. Although we are not
having the shortages, we are still having the problems with inflated oil prices. However,
not all things have resulting from the oil embargo have been bad. Cars are being designed
to get better gas mileage, and buildings to be more energy efficient.
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There have been some economic analysts predicting that oil prices were going to rise like
they did again this year, due to the low price of oil last year. Unleaded gasoline prices
were down to around a dollar per gallon, and with the surge of gas buying last summer
when prices were down, the surplus of oil became a shortage, therefore driving the price
up to new levels.
The picture of the gas pumps is a small picture, but trying to put the whole picture into
three pages of text was a difficult thing to do. For there are many topics that the oil
market covers, but can best be summed up as this. Don Roberts was out of gas at his
station because the oil manufacturers cheated the oil producers, and when the oil
producers finally got together to get back at the manufacturers, they ended up taking
their problems out of consumers.
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Endnotes