Word: cartels
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Dates: during 1970-1979
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...Kissinger's basic strategy for dealing with the oil cartel is 1) to threaten the OPEC countries with a break in prices in the future as the consuming countries gain greater energy independence, and 2) to hold out to the producers the promise of stable income over the long term if they agree to cooperate with the needs of the consumers...
...long-term impact of Kissinger's floor on OPEC is equally uncertain. There are no signs that the cartel will break up soon. Its members have proved that they have the cohesiveness to cut oil production at sharply varying rates in order to maintain the $10.80 price. Over the past year, the OPEC nations as a whole reduced output by 21%. Some countries have cut back even more: Iraq by 27%, Kuwait by 39%, Libya by 72%. They may well reduce production further instead of competing among each other and slashing prices. The producers feel that they ultimately gain...
Wealth means power, and the sharp rise in oil prices promises to bring a great deal more of that to the producers' cartel. Last May the World Bank startled the international community with a grim forecast that oil country surpluses would reach $653 billion by 1980, and an incredible $1.2 trillion by 1985. Surpluses on this scale would mean deep deficits and an era of unprecedented political and economic strains among the consuming countries...
...same time, imports by the oil producers have been growing phenomenally. Morgan Guaranty estimates that total OPEC imports jumped some 75% in 1974, a startling figure even when inflation is taken into account. The cartel countries spent $50 billion of their 1974 oil revenues of $105 billion on goods and services from the rest of the world. In the first nine months of 1974, Italy's exports to Iran and the Arab countries were 92% greater than in the same period the year before; U.S. exports were up a full...
When estimating the surplus for 1980, the optimists tend to lump the cartel countries together. But the populous nations (Iran, Venezuela, Nigeria) may register payments deficits in several years, while the lightly populated countries of the Persian Gulf will be building ever bigger surpluses. The Morgan Guaranty report concedes that in 1980, Saudi Arabia's surplus will bulge at $100 billion, by far the world's highest...