Description
This is a presentation about the oil crisis of 1970s.
Group Presentation
1
O il Crisis of 1970s
2
Before the Crisis
3
Conflict Between Israel and Arab Nations
• Consistent Armed Conflicts between Israel and Arab Countries since 1920 • Tensions aggravated with declaration of Israel’s Independence
• 1948-49 First Full – Scale War
• 1956 War ( Result of Nationalization of Suez Canal by Egypt )
4
5
Six Day War
• ‘The Six Day War’ or the ‘ The Setback of 1967 ’ as called by Arabs • War fought between Israel and the neighbouring states ( Egypt, Jordan and Syria ) • Swift and Decisive Israeli Victory
• Israel taking control of Sinai Peninsula from Egypt and Golan Heights from Syria
6
Founding of OPEC
• Formation of OPEC involving 12 countries at a Baghdad Conference on September 14, 1960
• Organized to resist pressure by ‘ Seven Sisters ‘ to reduce Oil Prices
• Aimed at Garnering larger share of Profits generated by Western Oil Companies and Greater control over Levels of Production
• Created to form a unified Bloc of Exporters
7
End of Bretton Woods Accord
• On August 15, 1971 United States of America pulled off Bretton Woods Accord • Britain and other Industrialized nations followed suit with their respective currencies • Large amount of currency getting printed in anticipation of fluctuation of Currencies • Depreciation of all currencies, less income for Oil producers for same price
8
1973 Yom Kippur War
• On October 6, 1973, Syria and Egypt launched a surprise attack on Israel • With Russia supplying arms to Egypt and Syria, USA decided to supply arms to Israel • Long Term possibility of High Oil Prices • Japan and some European Nations dissociated themselves from US Middle East Policy • OPEC Nations decided to use their leverage over Oil price setting mechanism
9
During the Crisis
10
History of Oil Prices
11
OPEC’s Arm Twisting of the World
• For the West, going against OPEC & at the same time, buying low priced crude oil was not possible.
• Shah of Iran remarked – “You buy our crude oil and sell it back to us, refined as petrochemicals, at a hundred times the price you've paid to us...; It's only fair that, from now on, you should pay more for oil.” • OPEC finally decided to put words to action.
• Oil Weapon - Embargo
12
Embargo
• On October 16th 1973, OPEC raised Crude Oil prices by 70% to $5.11 per barrel. • Decision to cut production (5%) & continue with it to embargo, was taken in principle. • Richard Nixon proposed $2.2 Billion aid to Israel. • Libya decided to embargo all oil shipments to the US. • Saudi Arabia and the other OPEC states joined & declared US as the "principal hostile country.
13
Embargo
• Among 9 EEC members, Netherland faced a complete embargo • UK & France received almost uninterrupted supply.
• Other 6 faced partial cutbacks.
• No consensus in Europe over policies. • European Economic Community finally issued a joint Pro-Arab statement which led to removal of Embargo.
14
Immediate Effects
• OPEC forced the oil companies to increase payments drastically. • By 1974, oil prices quadrupled to nearly US$12 per barrel.
• This price increase gave Middle East the control of a vital commodity – Oil Weapon. • Traditional flow of capital reversed.
• Oil exporting nations accumulated vast wealth which was used in a variety of ways.
15
Effects on United States
• Retail price (Per Gallon) rose from 38.5 cents in May 1973 to 55.1 cents in June 1974. • In 1973, William E. Simon became the first Administrator of the Federal Energy Office (Energy Czar). • Odd-Even Rationing.
• No sale on weekends, and rationing led to long cues.
• In early 1974, 20% of American gasoline stations had no fuel (American Automobile Association)
16
After the Crisis
17
Immediate Effects
• Price increased from 25 cents to 1 dollar/gallon • Long queue to get gas • Vulnerability of US was revealed
• Stock market crash in 1973 was compounded
• Steep hikes in the cost of food and other essentials
18
Effects
• Was Political and Economic Achievement for Middle East
• Economic recession
• Inflation remained above 10% • Unemployment was at its record high
19
Effort of the public to conserve oil and money
• Total consumption of oil in the US dropped by 20 %
• Daylight savings time was issued year round in an effort to reduce electrical use. • Tax credits
• Alternative energy sources
20
Search for Alternative Sources
• Solar power and Wind power • Tax Credits given • Oil-fired room heaters became obsolete • Electric Heater
• Increased domestic exploration to reduce the dependence on foreign oil.
• Coal and Nuclear power
21
Macroeconomic Effects
• Cars with big engines and large heavy bodies were no longer made in order to preserve oil and boost the economy • American auto sales dropped
• The sale of Japanese cars increased
• Japan took advantage • Massive change in cars
22
Effects on international relations
• Western Europe and Japan began switching from pro-Israel to more pro-Arab policies • Developed countries were hit hardly due to price uniformity all over the world • No Dual Pricing Policy
• India enjoyed friendly relations but still it was affected
• Japan – hardest hit - imported some 87 % of its oil, 80 % of which came from the Middle East.
23
Decline of OPEC
• OPEC had relied on the famously limited price inelasticity of oil demand. • Underestimated Substitution effect – Alternative sources
• Member Nations Divided among themselves
• Reduced Demand and Over production
24
Now
• Speed limits and fuel economy stickers • Today's appliances require less than half the energy that they required three decades ago
• Heating systems now are twenty percent more efficient
• The major oil consuming countries generally lacked strategic petroleum stockpiles in the 1970s. Now, most consumers maintain significant buffers.
25
Petrodollar Scam
The fall of US Dollar
26
• Back in 1971, the USA printed and spent far more paper money than it could cover by gold.
• Few years later, French demanded redemption of its paperdollar holdings in gold. But the USA rejected as it actually didn't have enough gold for the dollars it had already printed and spent all over the world, thus committing an act of bankruptcy.
27
• So the USA went to the Saudis and cut a deal – denominate all sales of oil in US dollars.
OPEC
• From that point, every nation that needed to buy oil had to firstly hold US dollars, which meant that they exchanged their goods and services for dollars, which the Americans just printed.
28
• However, the scam began to unravel when Saddam Hussein started selling Iraq's oil directly for Euro, abrogating the cozy arrangement the Americans had with OPEC. Thus Saddam had to be stopped. How?
29
• But Hugo Chavez (Venezuela President) also started selling Venezuelan oil for currencies other than dollars, so there were a number of attempts on his life and "regime change", traceable right back to the CIA. The petrodollar cat was out of the bag.
30
• Iran President (Ahmedinejad), watching all of this, decided to kick The Great Satan and do the same thing - sell oil for every currency EXCEPT US dollars.
31
• The worst thing for the Americans is that eventually, they will also have to buy their oil with Euro or Rubles instead of just printing paper money to get it.
• That will be the end of the American Empire, the end of funding for the US military and the destruction of the US economy.
• The great scam is coming to an end and there's not a lot that the USA can do about it, except start another world war!!! • Wait and Watch… Only few years/months ahead.
32
1
• People do not realize the real reason for the Iraq war and the current war threat against Iran by USA.
2
• It's not the nukes, it's not the terrorism and it's not the oil.
3
• It's all about the protection and propping up of the greatest con-job in recent history, the US Petrodollar Scam.
33
Th nks
34
doc_410519217.pptx
This is a presentation about the oil crisis of 1970s.
Group Presentation
1
O il Crisis of 1970s
2
Before the Crisis
3
Conflict Between Israel and Arab Nations
• Consistent Armed Conflicts between Israel and Arab Countries since 1920 • Tensions aggravated with declaration of Israel’s Independence
• 1948-49 First Full – Scale War
• 1956 War ( Result of Nationalization of Suez Canal by Egypt )
4
5
Six Day War
• ‘The Six Day War’ or the ‘ The Setback of 1967 ’ as called by Arabs • War fought between Israel and the neighbouring states ( Egypt, Jordan and Syria ) • Swift and Decisive Israeli Victory
• Israel taking control of Sinai Peninsula from Egypt and Golan Heights from Syria
6
Founding of OPEC
• Formation of OPEC involving 12 countries at a Baghdad Conference on September 14, 1960
• Organized to resist pressure by ‘ Seven Sisters ‘ to reduce Oil Prices
• Aimed at Garnering larger share of Profits generated by Western Oil Companies and Greater control over Levels of Production
• Created to form a unified Bloc of Exporters
7
End of Bretton Woods Accord
• On August 15, 1971 United States of America pulled off Bretton Woods Accord • Britain and other Industrialized nations followed suit with their respective currencies • Large amount of currency getting printed in anticipation of fluctuation of Currencies • Depreciation of all currencies, less income for Oil producers for same price
8
1973 Yom Kippur War
• On October 6, 1973, Syria and Egypt launched a surprise attack on Israel • With Russia supplying arms to Egypt and Syria, USA decided to supply arms to Israel • Long Term possibility of High Oil Prices • Japan and some European Nations dissociated themselves from US Middle East Policy • OPEC Nations decided to use their leverage over Oil price setting mechanism
9
During the Crisis
10
History of Oil Prices
11
OPEC’s Arm Twisting of the World
• For the West, going against OPEC & at the same time, buying low priced crude oil was not possible.
• Shah of Iran remarked – “You buy our crude oil and sell it back to us, refined as petrochemicals, at a hundred times the price you've paid to us...; It's only fair that, from now on, you should pay more for oil.” • OPEC finally decided to put words to action.
• Oil Weapon - Embargo
12
Embargo
• On October 16th 1973, OPEC raised Crude Oil prices by 70% to $5.11 per barrel. • Decision to cut production (5%) & continue with it to embargo, was taken in principle. • Richard Nixon proposed $2.2 Billion aid to Israel. • Libya decided to embargo all oil shipments to the US. • Saudi Arabia and the other OPEC states joined & declared US as the "principal hostile country.
13
Embargo
• Among 9 EEC members, Netherland faced a complete embargo • UK & France received almost uninterrupted supply.
• Other 6 faced partial cutbacks.
• No consensus in Europe over policies. • European Economic Community finally issued a joint Pro-Arab statement which led to removal of Embargo.
14
Immediate Effects
• OPEC forced the oil companies to increase payments drastically. • By 1974, oil prices quadrupled to nearly US$12 per barrel.
• This price increase gave Middle East the control of a vital commodity – Oil Weapon. • Traditional flow of capital reversed.
• Oil exporting nations accumulated vast wealth which was used in a variety of ways.
15
Effects on United States
• Retail price (Per Gallon) rose from 38.5 cents in May 1973 to 55.1 cents in June 1974. • In 1973, William E. Simon became the first Administrator of the Federal Energy Office (Energy Czar). • Odd-Even Rationing.
• No sale on weekends, and rationing led to long cues.
• In early 1974, 20% of American gasoline stations had no fuel (American Automobile Association)
16
After the Crisis
17
Immediate Effects
• Price increased from 25 cents to 1 dollar/gallon • Long queue to get gas • Vulnerability of US was revealed
• Stock market crash in 1973 was compounded
• Steep hikes in the cost of food and other essentials
18
Effects
• Was Political and Economic Achievement for Middle East
• Economic recession
• Inflation remained above 10% • Unemployment was at its record high
19
Effort of the public to conserve oil and money
• Total consumption of oil in the US dropped by 20 %
• Daylight savings time was issued year round in an effort to reduce electrical use. • Tax credits
• Alternative energy sources
20
Search for Alternative Sources
• Solar power and Wind power • Tax Credits given • Oil-fired room heaters became obsolete • Electric Heater
• Increased domestic exploration to reduce the dependence on foreign oil.
• Coal and Nuclear power
21
Macroeconomic Effects
• Cars with big engines and large heavy bodies were no longer made in order to preserve oil and boost the economy • American auto sales dropped
• The sale of Japanese cars increased
• Japan took advantage • Massive change in cars
22
Effects on international relations
• Western Europe and Japan began switching from pro-Israel to more pro-Arab policies • Developed countries were hit hardly due to price uniformity all over the world • No Dual Pricing Policy
• India enjoyed friendly relations but still it was affected
• Japan – hardest hit - imported some 87 % of its oil, 80 % of which came from the Middle East.
23
Decline of OPEC
• OPEC had relied on the famously limited price inelasticity of oil demand. • Underestimated Substitution effect – Alternative sources
• Member Nations Divided among themselves
• Reduced Demand and Over production
24
Now
• Speed limits and fuel economy stickers • Today's appliances require less than half the energy that they required three decades ago
• Heating systems now are twenty percent more efficient
• The major oil consuming countries generally lacked strategic petroleum stockpiles in the 1970s. Now, most consumers maintain significant buffers.
25
Petrodollar Scam
The fall of US Dollar
26
• Back in 1971, the USA printed and spent far more paper money than it could cover by gold.
• Few years later, French demanded redemption of its paperdollar holdings in gold. But the USA rejected as it actually didn't have enough gold for the dollars it had already printed and spent all over the world, thus committing an act of bankruptcy.
27
• So the USA went to the Saudis and cut a deal – denominate all sales of oil in US dollars.
OPEC
• From that point, every nation that needed to buy oil had to firstly hold US dollars, which meant that they exchanged their goods and services for dollars, which the Americans just printed.
28
• However, the scam began to unravel when Saddam Hussein started selling Iraq's oil directly for Euro, abrogating the cozy arrangement the Americans had with OPEC. Thus Saddam had to be stopped. How?
29
• But Hugo Chavez (Venezuela President) also started selling Venezuelan oil for currencies other than dollars, so there were a number of attempts on his life and "regime change", traceable right back to the CIA. The petrodollar cat was out of the bag.
30
• Iran President (Ahmedinejad), watching all of this, decided to kick The Great Satan and do the same thing - sell oil for every currency EXCEPT US dollars.
31
• The worst thing for the Americans is that eventually, they will also have to buy their oil with Euro or Rubles instead of just printing paper money to get it.
• That will be the end of the American Empire, the end of funding for the US military and the destruction of the US economy.
• The great scam is coming to an end and there's not a lot that the USA can do about it, except start another world war!!! • Wait and Watch… Only few years/months ahead.
32
1
• People do not realize the real reason for the Iraq war and the current war threat against Iran by USA.
2
• It's not the nukes, it's not the terrorism and it's not the oil.
3
• It's all about the protection and propping up of the greatest con-job in recent history, the US Petrodollar Scam.
33
Th nks
34
doc_410519217.pptx