For nationalist leaders in Latin America and the Middle East, the dominance of the oil companies was a bitter pill to swallow. Oil formed the bedrock of state finances, contributing between 57 and 80 percent of foreign exchange balances, as well as 53 percent of the state budget in Iraq, 97 percent in Kuwait, and 71 percent in Saudi Arabia. Yet despite oil’s importance, the producing states had little say in how the oil was produced, marketed, or sold. They felt as though they were at the mercy of the multinationals, which realized immense profits while returning only a small portion of the earnings to local governments. Show
The First Oil Shock and the Rise of OPECKissinger and Nixon both hesitated to back Israel directly, but when the Soviets began an airlift to resupply Syria and Egypt, US policymakers felt compelled to intervene to prevent a collapse of the Israeli position. On October 12, executives from several of the largest US companies implored the Nixon administration to consider the plight of their oil concessions, explained that there was “essentially no spare capacity” among the non-OPEC states, and warned that US actions in support of Israel “will have a critical and adverse effect on our relations with the moderate Arab producing countries.” The warning had no impact on US policy, and Kissinger wrote to King Faisal of Saudi Arabia on October 14, explaining that an aerial resupply of Israel “is not intended as anti-Arab.” In response, on October 17 Arab producers announced through OAPEC that they would cut production by 5 percent per month until all Israeli forces had withdrawn from the occupied territories; Saudi Arabia led the way with an immediate 10 percent production cut. Israeli forces began pushing back and encircling the Egyptian Third Army in the Sinai, and on October 22 Nixon asked Congress for $2.2 billion in aid for Israel. Saudi Arabia, relenting to pressure from the more radical members of OAPEC, announced a full embargo of the United States on October 23.  Figure 2. An under-supplied US gasoline station, closed during the 1973 oil embargo. Source: US National Archives. Dealing with OPEC, 1973–1991Apart from its gradual nationalization of the Seven Sisters, OPEC took little bold action during the 1970s. It did not deploy the “oil weapon” a third time. OPEC could have exerted pressure on the United States or the OECD by cutting production, but these steps ran counter to the individual interests of the group’s most powerful member, the Kingdom of Saudi Arabia. As the single largest global oil producer, Saudi Arabia could act as a “swing producer” and use its considerable spare capacity to feed existing demand in the event of a shortage elsewhere. As a conservative, pro-US monarchy, Saudi Arabia opted for a conciliatory approach and worked throughout the 1970s to keep oil prices consistent. Given its immense production and its capacity to increase or decrease output rapidly, Riyadh found that it could “impose its will” upon its OPEC colleagues. The active intervention of the United States in the defense of Saudi Arabia and the restoration of Kuwaiti independence opened a new era in the US relationship with OPEC. Operation Desert Storm erased the fears in the West of another punitive Arab oil embargo and illustrated the closeness and interdependence of the world’s major oil producers and its remaining superpower. While OPEC, led by Saudi Arabia, would continue to influence global oil prices, it recognized the status of the United States as both a major oil consumer and the guarantor of the existing oil security order. The New Normal, 1991–2018Discussion of the LiteratureEarly scholarship on OPEC is dominated by accounts of the organization’s rise during the 1960s and 1970s. These works, along with more recent contributions from economic historians, journalists, former oil ministers, and other industry veterans, tend to concentrate on the group’s identity as a formal oil producers’ cartel and are interested chiefly in economic issues with some consideration of political context. Of particular value are Ian Skeet, OPEC: Twenty-Five Years of Prices and Politics; Francisco Parra, Oil Politics: A Modern History of Petroleum; and Fuad Rouhani, A History of OPEC. What was oil used for in the 19th century?Through the 1800s, most oil was used for oil lamps and kerosene lamps--replacing whale oil, which was becoming scarce by then. By the early years of the 20th century, though, development of the internal combustion engine shifted demand of petroleum products to automobiles--the market that has driven demand ever since.
Who was able to dominate and control the oil industry in the late 19th century?In the end, Rockefeller made a deal with the other company, which gave Standard Oil ownership of nearly all the oil pipelines in the nation. By 1880, Standard Oil owned or controlled 90 percent of the U.S. oil refining business, making it the first great industrial monopoly in the world.
How was Rockefeller able to build his monopoly across the oil industry?Standard Oil gained a monopoly in the oil industry by buying rival refineries and developing companies for distributing and marketing its products around the globe. In 1882, these various companies were combined into the Standard Oil Trust, which would control some 90 percent of the nation's refineries and pipelines.
How was oil used in the Industrial Revolution?Answer and Explanation: Oil's first use in the Industrial Revolution was for heating and lighting via kerosene, a petroleum-derived fuel that was better than previous methods as it burned less and could be produced more cheaply.
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Who is able to dominate and control the oil industry in the late 19th century apex?
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