The Effects of Decreasing Oil Prices on OPEC Creator States

Undergraduate
Essay
Miscellaneous
Pages 10 (2510 words)
Download 0
Venezuela was the first country to move towards the establishment of OPEC by approaching Iran, Iraq, Kuwait and Saudi Arabia in 1949, suggesting that they exchange views and explore avenues for regular and closer communications between them (Yergin; Figueredo, 2007; Perkins, 2005)…

Introduction

OPEC was founded in Baghdad, triggered by a 1960 law instituted by American President Dwight Eisenhower that forced quotas on Venezuelan and Persian Gulf oil imports in favor of the Canadian and Mexican oil industries. Eisenhower cited national security, land access to energy supplies, at times of war. When this led to falling prices for oil in these regions, Venezuela's president Romulo Betancourt reacted seeking an alliance with oil producing Arab nations as a preemptive strategy to protect the continuous autonomy and profitability of Venezuela's natural resource: oil (Perkins, 2005).
As a result, OPEC was founded to unify and coordinate members' petroleum policies. Original OPEC members include Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Between 1960 and 1975, the organization expanded to include Qatar (1961), Indonesia (1962), Libya (1962), the United Arab Emirates (1967), Algeria (1969), and Nigeria (1971). Ecuador and Gabon were members of OPEC, but Ecuador withdrew on December 31, 1992 because they were unwilling or unable to pay a $2 million membership fee and felt that they needed to produce more oil than they were allowed to under the OPEC quota. Similar concerns prompted Gabon to follow suit in January 1995. Angola joined on the first day of 2007. ...
Download paper
Not exactly what you need?

Related papers

Macroeconomics-oil prices
The dependence of the economy on oil has reduced considerably with the strengthening of the IT and services sectors. Although the rise in prices of oil has been large it has not been sudden and the economies of the major economic powers have adjusted to the change. The rise in oil prices will definitely result in an across the board change in prices and thus inflation rates will continue to be…
Are Current Oil Prices Fair?
In this highly industrialized economy, fuel is considered a necessity for the government, business organizations, and households alike. It is noted that consumption in the United States has sharply risen to support the growing economy and accommodate technological changes. However, this makes the life of the Americans fully dependent on oil. The rise in oil prices often presents financial…
Rising Oil Prices
Fuel prices have risen and affected every nation in the world since the early years of this decade. Nandia Mongia (2008) reports that crude oil prices have increased in the world market from 22 U.S. Dollars up to almost $90 U.S. Dollars per barrel. This affected the prices of petroleum products like diesel, kerosene, propane, and gasoline and hit lower-income households. Figure 1 shows the rising…
The Effects of Decreasing Oil Prices on OPEC Creator States
OPEC was founded in Baghdad, triggered by a 1960 law instituted by American President Dwight Eisenhower that forced quotas on Venezuelan and Persian Gulf oil imports in favor of the Canadian and Mexican oil industries. Eisenhower cited national security, land access to energy supplies, at times of war. When this led to falling prices for oil in these regions, Venezuela's president Romulo…
The Impact of Oil on OPEC Countries
Saudi Arabia, as the world's largest oil exporter, and the other members of the OPEC have plunged the 'oil weapon'2 and changed their group into a central bank for the world's oil. Claude Mandil, executive director of the IEA, who in 1975 set up at Kissinger's proposal in response to the Arab oil embargo, said:…
Oil Prices Essay
The oil market has highly inelastic demand and supply especially in the short run mainly because there are a few if any substitutes for it. Scientists have attempted tirelessly to create solar and CNG run cars and there has been an attempt to harness nuclear power at all levels of the industrial use.…
Subprime Crisis and Oil Prices
But since interest rates rose and the worth of houses dropped in the last two years in the crisis country, refinancing has become more difficult, leading to more instances of foreclosures and defaults.…