Oil and American Power-Three Years Later
IT IS now exactly three years since the Organization of Petroleum Exporting Countries (OPEC) raised the price of their’ oil fourfold. The rise came in the aftermath of an embargo of sorts undertaken during the Yom Kippur War by the major Arab producers of the Persian Gulf. Taken together, these events represented the onset of what soon became known as the oil crisis.
If crisis is defined as a situation marked by pervasive uncertainty, and in which an established pattern of relationships has been challenged or overturned, the term was certainly appropriate. In the months following the OPEC price rise, the noted oil economist Walter J. Levy wrote: “Rarely, if ever, in postwar history has the world been confronted with problems as serious as those caused by recent changes in the supply and price conditions of the world oil trade.” At the time, Levy’s opinion was widely shared. In retrospect, it appears overblown to an increasing number of observers. Nevertheless, the question persists whether it is closer to the truth than the view that the consequences of OPEC actions have since been con- tained by an international system which remains essentially unimpaired.
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