“The 1974 Oil Production Cutbacks”

OPEC, the Organization of the Petroleum Exporting Countries, is an intergovernmental organization of twelve oil producing countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.  Vienna has been the headquarters of the organization since 1965, and had its 161st meeting on June 14, 2012. The OPEC cartel’s choice to cut back production of oil in 1974 led to a world shortage that affected the US, Europe, and Canada. Due to this shortage, the price of gasoline skyrocketed in some countries. Places where it skyrocketed, people chose to use alternative methods of transportation to offset the high prices of the world market levels of gasoline and oil. The United States had a price control for its citizens, and due to the scare of the shortage, this leveling of gasoline prices caused many people to attempt to buy up more than they needed at any given moment. This would have caused an even bigger shortage if it had not been for Europe and Canada choosing not to control the prices, which in turn made their citizens use the alternative measures of transportation. Although this was not the expected outcome, the shortage in Europe and Canada disappeared on its own due to the intuitive minded individuals who more than likely chose to bicycle, carpool, or walk to work. The demand for the gasoline decreased, therefore, the shortage was resolved in Europe and Canada, and eventually the United States. In the U.S., however, with people buying and demanding more of the already scarce gasoline, it caused an even greater shortage for a time and longer lines. Eventually, due to the Canadians and Europeans voluntary actions the global shortage evened out until the prices dropped back down and the scare was over for the Americans. The shortage possibly could have been a lot less strenuous if the U.S. citizens would have carpooled or biked to work also.

 

Reference

www.opec.org

http://www.en.wikpedia.org/wiki/OPEC

 

Tamuriel L. Dillard

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