U.S. Policies Concerning OPEC

A comprehensive analysis of the role of economic sanctions in U.S. foreign policy.

This paper describes how U.S. foreign policy has developed as the result of American efforts to influence the price and supply of oil in OPEC countries. Also examined are the impact of variations in the supply and price of oil on the U.S. economy, the 1970 oil crisis, the impact of the Persian Gulf War, and the current unrest in the Middle East in this context. A summary of the research is presented in the conclusion.

Major Players and Events Influencing U.S. Foreign Policy
Overview of Issues Related to Economic Sanctions
Overview of the Persian Gulf
Impact of the Persian Gulf War of U.S. Foreign Policy
U.S. Foreign Policy and the Strategic Petroleum Reserve
“Since the 1973 OPEC oil embargo, U.S. dependence on oil imports has risen to record levels, from 28 percent in 1973 to 48 percent in 1997 (“The 1973 Oil Embargo: What Have We Learned In the Last 25 Years?,” n. pag.). Through 1972, Americans had become accustomed to expanding energy consumption with minimal concerns about the constancy of supply or sharp price escalations. In 1973, however, expectations about energy supply changed dramatically. The turmoil started early in 1973, as customers experienced the first symptoms of something being wrong with electricity brown outs and rapidly rising prices for fuels and other necessities. Price controls and allocation systems not only failed to resolve these problems, they seemed to aggravate them. Most memorably, October brought an oil embargo by members of the Organization of Arab Petroleum Exporting Countries, cutting further into the supply of oil and elevating prices to levels previously thought impossible. Customers experienced lines and sometimes no fuel at gasoline stations. A year of bad news was punctuated in December, when the President announced that because of the energy crisis the lights on the national Christmas tree would not be turned on. Throughout the year, energy stayed at the forefront of public attention. Interruptions in energy supplies were also closely related to other issues of national importance-a weakening of the economy and a reassessment of America’s strategic position in the world. From 1973 to the mid-1980’s, prices continued at very high levels, in part because of a second oil shock in 1979-80. During this period, rapid progress was made in raising American oil production, reducing dependence on oil imports, and improving end-use efficiency. After the oil price collapse of the mid-1980’s, however, prices retreated to more moderate levels, the pace of efficiency gains slowed, American oil production fell, and the share of imports rose. Other, more violent events in the Middle East, however, would soon create a new political situation in which the U.S. was to be forced to create foreign policy directly as a result of America’s need for oil.”