OPEC was created in 1960 to protect the interests of oil-producing countries and coordinate policies and prices. It represents two-thirds of the world’s oil reserves and half of the world’s oil exports. The 1973 oil embargo demonstrated OPEC’s power over world politics, causing inflation and economic recession in the US and prompting automakers to produce smaller, more fuel-efficient vehicles. While often seen as a villain, OPEC prevents its members from being exploited by industrialized countries and ensures a fair price for crude oil.
The Organization of the Petroleum Exporting Countries (OPEC) was created in 1960 to unify and protect the interests of oil producing countries. The organization allows oil-producing countries to secure their income by coordinating policies and prices with each other. This unified front was created primarily in response to efforts by Western oil companies to bring down oil prices. Original members included Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. OPEC has since expanded to include seven other countries – Algeria, Angola, Indonesia, Libya, Nigeria, Qatar and the United Arab Emirates – for a total of 12 members.
OPEC represents a considerable political and economic force. Two-thirds of the world’s oil reserves belong to its members; likewise, OPEC members are responsible for half of the world’s oil exports. The fact that the organization controls the availability of a substance so universally sought after by modern society makes it a force to be reckoned with.
The first demonstration of the power OPEC could have over world politics was in the 1970s. When the Yom Kippur War broke out in the Middle East, the United States helped Israel defend itself against the Egyptian and Syrian armies. In what may have been a response to this interference in the war, OPEC instituted an oil embargo that targeted the United States and its European allies. The embargo lasted from October 19, 1973 to March 17, 1974.
The effects of the OPEC oil embargo have been widespread. The immediate effects included inflation and economic recession in the United States and other countries targeted by the embargo. Car owners in the United States were limited to specific days when they could buy gas: even dates for even-numbered cars and odd dates for odd-numbered cars.
A national law has been instituted introducing more restrictive speed limits, as well as a year-round summer time. The oil embargo has also prompted automakers to produce smaller, more fuel-efficient vehicles. Even after the embargo ended, oil prices continued to rise and the US economy continued to suffer.
While OPEC is often seen as a villain in the political arena, the organization serves an important purpose. It prevents its members from being exploited by industrialized countries by ensuring that oil-exporting countries receive a fair price for crude oil. Because oil-exporting countries depend on industrialized countries for petroleum products, OPEC standards prevent industrialized countries from buying crude oil at bargain prices, then going back and selling petroleum products at grossly inflated prices.
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