OPEC

OPEC - Organization of Petroleum Exporting Countries

1st OPEC Conference, Baghdad, September 10–14, 1960 Purpose and origin: In 1960, many oil-rich nations joined together to control the production and price of oil. 1st OPEC Conference, Baghdad, September 10–14, 1960 http://www.opec.org/aboutus/history/history.htm

Original Members Iran Iraq Kuwait Saudi Arabia Venezuela http://www.opec.org/aboutus/history/history.htm

There are 14 member countries total: 4 in Africa, 2 in Latin America, and 6 in the Middle East (Southwest Asia). (That’s 3 different continents) http://en.wikipedia.org/wiki/Image:Opec_Organization_of_the_Petroleum_Exporting_Countries_countries.PNG

Saudi Arabia is the biggest producer in OPEC Saudi Arabia is the biggest producer in OPEC. Together, OPEC countries produce about 40% of the world's oil. They have about 2/3 or the world’s oil reserves. http://i.dailymail.co.uk/i/pix/2014/11/28/article-3c05cd43-e2e5-4f7d-839c-66267b5d30fe-6UPqHfJqaHSK2-381_634x1268.jpg

http://content. answers http://content.answers.com/main/content/wp/en-commons/thumb/3/37/400px-Chart-of-Oil-Trading-Nation.gif

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

When they produce more, prices go down. That’s explained by the economic law of “supply and demand.” http://moodle.smithtown.k12.ny.us/file.php/231/gasoline-supply-demand.jpg

LOW demand & HIGH supply = very low price! http://www.reverendfun.com/add_toon_info.php?date=20130329&language=en

But HIGH demand & LOW supply = very HIGH price! http://3.bp.blogspot.com/_b20ZX7pAH8k/S48Br_HGUoI/AAAAAAAAAAc/V78sPzexWGI/s320/supply+and+demand.gif

Cartogram of energy consumption Many wealthy countries depend on other countries for the HUGE amounts of energy they need. http://www-personal.umich.edu/~mejn/cartograms/energyconsump1024x512.png Cartogram of energy consumption

In 1973, OPEC refused to ship oil to countries that had supported Israel in a war against Egypt and Syria. The result here was the “1973 energy crisis.”

1973 political cartoon http://www.cvce.eu/content/publication/1999/9/16/e2341257-db3c-4d00-b836-d19903d52762/publishable.jpg

That led to a shortage of gas here. The price of oil quadrupled That led to a shortage of gas here. The price of oil quadrupled. And even with high prices, many gas stations sold out of gas. Oct 1973 – Jan 1974, but prices never went down much after that. http://www.biocrawler.com/w/images/thumb/7/76/350px-Energy_crisis_-_oild_sold_out.jpg

In recent years, oil prices around the world continued to rise In recent years, oil prices around the world continued to rise. OPEC was only part of the cause. http://successsystemsnow.com/wp-content/uploads/2011/03/RisingOilPrices.jpg

Demand for energy is also rising world-wide. That brings higher prices.

Cartogram of energy consumption The U.S. is the world’s biggest energy consumer, using much more energy than we produce. So high oil prices hit us hard! Cartogram of energy consumption

After the U. S. , China is the biggest consumer of energy After the U.S., China is the biggest consumer of energy. Since 2000, there has been a huge boom in car purchases in China. The same thing seems to be happening in India. http://www.all-creatures.org/hope/gw/China's_oil_consumption_1980-2006.jpg

But it’s not a simple or fast process. Our government wants us to become less dependent on foreign energy sources. But it’s not a simple or fast process.

We made some progress since 2010, by producing more oil here in the U We made some progress since 2010, by producing more oil here in the U.S.

A method called hydraulic fracturing (“fracking”) was helping the U. S A method called hydraulic fracturing (“fracking”) was helping the U.S. produce more oil than ever before. Traditional drilling is kind of like drilling into a jelly donut. There’s a big pocket of oil. Fracking is more like drilling into a layer cake. Oil is trapped in layers of rock. You just drill down and pump it up. You drill, then you have to blast apart the rock before you can pump it up.

Fracking is MUCH more expensive than traditional drilling. But oil was selling at high prices, so U.S. oil companies were willing to use high-cost methods to get more oil.

Remember how “supply and demand” works? OPEC was not happy about losing the control it had on world oil prices. So they have been selling lots of oil, no matter the price. This has been forcing the price of oil down since 2014. Remember how “supply and demand” works?

OPEC’s plan worked. By mid-2015, U. S. oil companies were cutting back OPEC’s plan worked. By mid-2015, U.S. oil companies were cutting back. Fracking was just too expensive when oil sales prices were so low.

OPEC Headquarters in Vienna, Austria While the world depends on fossil fuels, OPEC is a way for less-powerful nations to band together and use their economic power. OPEC Headquarters in Vienna, Austria http://content.answers.com/main/content/wp/en-commons/thumb/e/e0/250px-OPEC01.jpg