Politics of Oil

How do we deal with other nations? The executive branch of government is charged with handling our nation’s foreign policy …Thus the way we deal and or get along with other countries is a matter of economic and national security Oil in the middle east and our relations with Israel are two areas of particular importance

Oil Factsheet Oil is the No. 1 natural resource on earth It is not renewable Essential for every country particularly developing and highly developed countries Prior to 1960s Oil markets were controlled by large multinational companies Countries that owned the oil wanted autonomy particularly middle east nations…

OPEC The Organization of the Petroleum Exporting Countries (OPEC) is a permanent, intergovernmental Organization, created at the Baghdad Conference on September 10–14, 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.

OPEC OPEC (12 members)-founded in 1960 Prevent exploitation by wealthy nations Founded by Iraq and 4 other countries to control WORLD oil supply Organization is essentially a monopoly Its formation drove up oil prices Dominate world trade and stabilize political power

OPEC Generally OPEC’s relationship with US and western world is tense We cooperate with each other because we depend on their oil…they depend on our consumer goods and technology

http://www.opec.org/opec_web/en/about_us/24.htm

Strait/Chokepoint Straits are narrow bodies of water connecting two larger bodies of water Chokepoints are narrow channels along widely used global sea routes some so narrow that restrictions are placed on the size of vessel that can navigate through them. They are a critical part of global energy security due to the high volume of oil traded through their narrow straits.

Security Issues Blockage of a chokepoint can lead to temporary increases in oil costs (with ripple effect in the gas prices at Wawa, Sheetz, etc.) Critical chokepoints in the hands of terrorists pose tremendous threats to the World in terms of economic security and national security

Important chokepoints on earth Strait of Hormuz Strait of Malacca Strait of Gibralter Suez Canal Panama Canal Bab el Mandeb Strait Turkish Straits

Chokepoints on Earth http://205.254.135.7/countries/regions-topics.cfm?fips=WOTC

Strait of Hormuz (Middle East) Strait of Malacca (Southern Asia) Strait of Gibralter (Spain/Africa) Suez Canal (Egypt) Panama Canal (Central America) Bab el Mandeb Strait (Africa/Middle East) Turkish Straits (Turkey)

Iran and the Strait of Hormuz World’s most important chokepoint Want to control trade routes with no US involvement If we leave completely potential for conflict Important trade Critical military area 60% of Iran economy derived from oil

Our Response in Times of Conflict Sanctions Trade wars

Sanctions-restrictions placed on countries to force to do something. Trade wars-sanctions or embargos placed on countries to avoid military wars.

Energy Independence in America? For no. 2 provide relative location of country Example: Venezuela is in the north northwest region of South America

Vocabulary from case study and related terms balance of trade: the difference between a country's total exports and total imports. Countries want to have more exports than imports.

embargo: a government order preventing trade with another country, an agreement among a group of nations that prohibits them all from trading with a target nation European Union: an organization whose goal is to unite Europe so that goods, services, and workers can move freely among member countries

G7: seven nations with the largest economies G7: seven nations with the largest economies... US, Japan, Germany, UK, France, Canada, Italy and Russia. It is also known as the G8 and G22. There goal is to promote global economic growth. international trade: exchanging goods and services between countries

NAFTA: North American Free Trade Agreement; allows open trade with US, Mexico, and Canada net exporter: a country that exports more goods than it imports

Persian Gulf: Important body of water west of Iran and holds roughly 70% of the world's oil. 17. shale: mud and clay sediments that have hardened into rock. new drilling technology of shale may allow the US to become energy independent.

Main Points US has potential to be energy independent by drilling shale fields in our own country Environmental issues will remain Global security still important because we rely on countries like to China for consumer goods. China, in turn relies on Iran and other OPEC nations for oil