1. Politics of Oil

2. 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

3. 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…

4. 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.

5. 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

6. 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

8. 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.

9. 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

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

11. Chokepoints on Earth

12. 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)

13. 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

15. Our Response in Times of Conflict
Sanctions
Trade wars

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

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

18. 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.

19. 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

20. 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

21. 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

22. 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.

23. 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