O.P.E.C

Organization of the Petroleum Exporting Countries

O.P.E.C Summary

The Organization of the Petroleum Exporting Countries. Better known as (OPEC) implements what it calls "oil diplomacy" on this day in 1973: It prohibits any nation that had supported Israel in the Yom Kippar War" with Egypt, Syria and Jordan from buying any of the oil it sells. The seeming everlasting energy crisis marked the end of the era of cheap gasoline and caused the share value of the New York Stock Exchange to drop by $97 billion. This, in turn created one of the worst recessions the United States had ever seen. In the middle of 1973, even before the OPEC embargo, an American oil crisis was on its way. Domestic reserves were low (about 52 billion barrels, a 10-year supply); the United States was importing about 27 percent of the crude petroleum it needed every year; and gasoline prices were rising. The 1973 war with Israel made things even worse. OPEC announced that it would punish Israel's allies by implementing production cuts of 5 percent a month until that nation withdrew from the occupied territories and restored the rights of the Palestinians. It also declared that the true "enemies" of the Arab cause (in practice, this turned out to mean the United States and the Netherlands) would be subject to an indefinite "total embargo." Traditionally, per-barrel prices had been set by the oil companies themselves, but in December, OPEC announced that from then on, its members would set their own prices on the petroleum they exported. As a result, the price of a barrel of oil went up to $11.65, 130 percent higher than it had been in October and 387 percent higher than it had been the year before.

oil cartel

a cartel of companies or nations formed to control the production and distribution of oil

international organization

international alliiance involving many different countries
A Quick History of War, OPEC, and Gas Prices
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Exporting

shipping the goods and services out of the port of a country

Intergovernmental

involving two or more governments or levels of government.