OPEC: What is it and what does it do?

OPEC - Organization of Petroleum Exporting Countries

Purpose and origin: In 1960, many oil-rich nations joined together to control the production and (therefore) the price of oil. 1st OPEC Conference, Baghdad, September 10–14,

 Original Members Iran Iraq Kuwait Saudi Arabia Venezuela

There are now 12 member countries total: 4 in Africa, 2 in Latin America, and 6 in the Middle East (Southwest Asia). (August 2014)

OPEC accounts for about 40% of the world's oil production. They have about 2/3 of the world’s oil reserves.

When the blue bar goes BELOW the line, it means the country is not exporting any oil. It is using up what it produces and then IMPORTING more oil. What does this say about the United States? OIL PRODUCING COUNTRIES

Cartogram of energy consumption Many developed countries, including the U.S., depend on other countries for the huge amounts of energy they need.

When OPEC decides to produce less oil, the world’s supply of petroleum drops. But people still need oil, so the demand stays high. This makes the price goes up since there’s less oil to go around.

On the other hand, when they produce more, prices go down. This is explained by the basic economic concept of “supply and demand.”

Quick review: Supply & Demand Which cost more in jewelry: pearls or diamonds? Both are useful. Both are attractive. Why do diamonds cost SO MUCH MORE than pearls?

In the U.S., gas prices were very low until the 1970s. Only a few wealthy nations used a lot of oil, which meant the demand was fairly low. In addition, there had always been a lot of oil coming from around the world (including OPEC nations), which meant supply was high.

In 1973, Arab OPEC member nations refused to ship oil to the U.S. and several other western countries. and Syria. The result here was the “1973 energy crisis.” This was to protest the U.S. (and other countries) support for Israel in a war against Egypt 1973 WAKE-UP CALL

In the U.S., that led to a serious shortage. The price of oil quadrupled. Arab Oil Embargo,

Lines at gas stations wrapped around blocks and stopped in streets /2013/12/02/BostonGlobe.com/EditorialOpinion/Images/gas010.jpg

To shorten the lines, the U.S. started rationing. If your license plate ended in an even number, you could get gas on days of the month that were even. If your plate was odd, you could get gas on odd numbered days. Notice the tag number and notice the man telling the driver “no.”

Limits were put on how much gas people could buy in one visit. Congress even lowered the speed limit on all Interstate Highways from 70 mph to 55 mph. There was some evidence that driving slower burned less gas (per mile) than driving faster.

amounts allowed per person, many gas stations sold out of gas. But even with high prices and limited

What about U.S. oil concerns now? The U.S. still imports more oil than we produce, but we are producing more oil than in the past.

And since oil – like coal and natural gas – is a fossil fuel, it won’t last forever. The U.S., like other countries, is therefore working to develop more renewable energy sources.

Gas prices dropped some after the 1973 event. But prices began quickly rising again around the year

While OPEC is part of the reason for gas prices, they are not the only reason. They only control supply. (And they only control about half of the world’s supply.)

Demand for energy is also rising world- wide.

What is happening to consumption of these fossil fuels – oil, natural gas, and coal – in each of these regions?

After the U.S., China is the world’s biggest consumer of energy. Since 2000, there has been a huge boom in car purchases in China. And as industry grows, industrial fuel consumptions grows, too.

So OPEC is part of a much larger issue: energy consumption. In our high-tech world, energy and power are closely related. And in the not-so-distant future, our world must have steady sources of renewable energy. In our high-tech world, energy and political power are closely related.

OPEC Headquarters in Vienna, Austria In the meantime, as the world depends on fossil fuels, OPEC is a way for less- powerful nations to band together and use their economic power.