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Chapter 7: Problem 5

The average person probably had never heard of the Organization of Petroleum Exporting Countries (OPEC) until 1973 or 1974 when oil prices skyrocketed. In fact, OPEC was founded in 1960. Why did OPEC not achieve worldwide prominence until the 1970 s? What factors contributed to OPEC's problems in the 1980 s?

Short Answer

Expert verified
OPEC gained worldwide prominence in the 1970s mainly due to the 1973 oil embargo which led to a sharp increase in global oil prices and spotlighted OPEC's influence. Its problems in the 1980s arose from a combination of: many countries reducing their dependence on OPEC oil by exploiting other energy sources and increasing energy efficiency, and increased oil production in non-OPEC countries that led to a surplus of oil on the world market, thereby reducing the demand for OPEC oil.

Step by step solution

01

Understanding OPEC's rise in the 1970s

The first step in this process is to understand why OPEC, founded in 1960, only gained global prominence in the 1970s. Investigate the major global events that occurred during this period. During the 1970s, the world experienced two major oil crises that dramatically increased the price of oil and, consequently, OPEC's influence. The key event was the 1973 oil embargo, when OPEC's Arab members refused to export oil to countries supporting Israel during the Yom Kippur War. This led to an enormous increase in global oil prices and spotlighted OPEC's influence.
02

Analyzing OPEC's problems in the 1980s

Next, explore the factors contributing to OPEC's struggles in the 1980s. The 1980s saw a drop in oil prices due to several factors. First, after the oil aches of the 1970s, many countries sought to reduce their dependence on OPEC oil by exploiting other energy resources, increasing energy efficiency, and maintaining strategic petroleum reserves. Furthermore, high oil prices led to increased production in non-OPEC countries, leading to a surplus of oil on the market. All these factors led to a decrease in demand for OPEC oil, contributing to their problems.
03

Connecting the historical factors

Finally, link and summarize the historical factors contributing to OPEC's rise in the 1970s and its problems in the 1980s. These events highlight how geopolitical conflicts and economic factors played a significant role in shaping OPEC's influence on the global stage.

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