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Y669 IPE:Y669 IPE:Oil PoliticsOil Politics
October 5, 2010October 5, 2010
World Energy World Energy Consumption, 1965-Consumption, 1965-
2005, in Terawatts (TW)2005, in Terawatts (TW)
Top Consuming Top Consuming Countries, 1960-2005, in Countries, 1960-2005, in Million Barrels per DayMillion Barrels per Day
Figure 9-5. World Consumption of Figure 9-5. World Consumption of Petroleum, 1960-2005, in Millions of Petroleum, 1960-2005, in Millions of
Barrels per DayBarrels per Day
Source: U.S. Department of Energy, Energy Information Agency,International Energy Annual (various years).
OPEC Headquarters, OPEC Headquarters, ViennaVienna
Sheik AhmedZaki Yamani
Table 9-1. Members of OPECTable 9-1. Members of OPEC
Country Membership
Algeria 1969
Angola 2007
Ecuador Rejoined 2008
Indonesia 1962
Iran 1960
Iraq 1960
Kuwait 1960
Libya 1962
Nigeria 1971
Qatar 1961
Saudi Arabia 1960
United Arab Emirates 1967
Venezuela 1960
OPECOPEC
Organization of Oil Exporting Countries
Major Crude Oil Reserves, Major Crude Oil Reserves, 20062006
Source: Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University
Figure 9-4. Production of Crude Petroleum by Figure 9-4. Production of Crude Petroleum by OPEC Countries, 1970-2007, in Millions of OPEC Countries, 1970-2007, in Millions of
Barrels per DayBarrels per Day
Source: U.S. Department of Energy, Energy Information Agency,International Energy Annual (various years).
Figure 9-7. OPEC and Non-OPEC Oil Figure 9-7. OPEC and Non-OPEC Oil Production, 1970-2007, in Millions of Barrels Production, 1970-2007, in Millions of Barrels
per Dayper Day
Source: Department of Energy, Energy Information Agency,International Energy Annual (various years).
Non-OPEC Oil Non-OPEC Oil Production, 1900-2003Production, 1900-2003
Middle EastNorth AmericaLatin AmericaAfricaWestern EuropeFormer Soviet UnionPacific Asia
Major Oil Routes & Major Oil Routes & Chokepoints, 2000Chokepoints, 2000
15
10
3
1
Million barrelsper day
Hormuz
MalaccaBab el-Mandab
Suez
Bosphorus
Panama
Source: Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra University
Price of Oil, Nominal and Price of Oil, Nominal and Real Real
1861-2006, $ per Barrel1861-2006, $ per Barrel
Source: Wikipedia.
Figure 9-14.Figure 9-14.U.S. Gasoline Prices in Current and U.S. Gasoline Prices in Current and
Constant 2007 Prices, 1919-2007, in Cents Constant 2007 Prices, 1919-2007, in Cents per Gallonper Gallon
Source: Department of Energy, Energy Information Agency,Short Term Energy Outlook, August 2008.
Spot Prices, 1980-2010Spot Prices, 1980-2010
Gasoline Prices in Gasoline Prices in Pennies per Gallon, Pennies per Gallon,
1973-20101973-2010
Real Price of Oil and Real Price of Oil and Major Disruptions in Major Disruptions in
World Oil SupplyWorld Oil Supply
0
10
20
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60
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80
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Suez War
OPEC Embargo
6 Days War
Iranian Revolution
Iran / Iraq War
Gulf War
Figure 9-8. U.S. Production, Consumption, and Figure 9-8. U.S. Production, Consumption, and Imports of Crude Petroleum, 1949-2007, in Imports of Crude Petroleum, 1949-2007, in
Millions of Barrels per DayMillions of Barrels per Day
Source: Department of Energy, Energy Information Agency,International Energy Annual (various years).
Challenges to the Seven Challenges to the Seven Sisters and the rise of the Sisters and the rise of the
cartel (OPEC)cartel (OPEC) ““Oligopsony = An Oligopsony = An oligopsonyoligopsony is a is a
market form in which the number of buyers in which the number of buyers are small while the number of sellers in theory are small while the number of sellers in theory could be large.”could be large.” The Seven Sisters were also an oligopsony!The Seven Sisters were also an oligopsony!
“ “A A cartelcartel is a group of formally independent is a group of formally independent producers whose goal it is to producers whose goal it is to fix prices, to , to limit limit supply and to limit and to limit competition.”.”
OPEC OPEC was formed in 1960, but its effects was formed in 1960, but its effects were most dramatic in 1974.were most dramatic in 1974.
OPEC sought to counterbalance the Seven OPEC sought to counterbalance the Seven Sisters.Sisters.
Definitions from WikipediaDefinitions from Wikipedia
Conservation Measures Taken Conservation Measures Taken after the Oil Price Shocks of the after the Oil Price Shocks of the
1970s1970s Higher taxes on gasoline and fuel oil Higher taxes on gasoline and fuel oil
in Western Europein Western Europe Fuel efficiency standards for motor Fuel efficiency standards for motor
vehicles in the USvehicles in the US Accelerated adoption of energy-Accelerated adoption of energy-
efficient heating for homes, offices, efficient heating for homes, offices, and factoriesand factories
General substitution of energy-General substitution of energy-conserving technologies for energy-conserving technologies for energy-intensive technologiesintensive technologies
Oil Prices have less impact on US Oil Prices have less impact on US EconomyEconomy
'70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '048,000
10,000
12,000
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16,000
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©FactSet Research Systems
The Energy Intensity of Output has Declined Markedly
US Demand for All Fuels
This doesn’t mean the US is consuming less oil,
just that it is more efficient at utilizing oil to produce
What Role Did Energy What Role Did Energy Politics Play in September Politics Play in September
11? In…11? In… AfghanistanAfghanistan Central AsiaCentral Asia The Middle EastThe Middle East The Rest of the WorldThe Rest of the World
AfghanistanAfghanistan• Afghanistan itself has few exportable energy resources.
• Its main value from an energy standpoint stems from the fact that it offers a route for Caspian energy to the sea via Pakistan.
• There are large deposits of oil and natural gas in the Caspian Sea region.
• The main problem is getting these resources to markets.
• Pipelines are required to service the large markets in North America, Europe, and E. Asia.
Two Pipelines in Greater DetailTwo Pipelines in Greater DetailMain participants in these two pipelines:
Tengiz to NovorossiyskRussian Federation 24%Repub. Of Kazakhstan 19%Sultanate of Oman 7%Chevron 15%LUKARCO 12.5%Rosneft/Shell 7.5%Mobil 7.5%Agip 2%
Turkmenistan to Pakistan:Unocal, Gazprom, Hyundai,Itochu, Delta Oil (Saudi Arabia)
What is the Role of Saudi Arabia What is the Role of Saudi Arabia within OPEC?within OPEC?
It is the largest single supplier of oil.It is the largest single supplier of oil. The small Saudi population permits The small Saudi population permits
them the luxury of varying the them the luxury of varying the amount of oil that they sell (thereby amount of oil that they sell (thereby controlling prices):controlling prices): When they want the price to increase When they want the price to increase
they sell lessthey sell less When they want the price to decrease When they want the price to decrease
they sell morethey sell more
Figure 9-10. Saudi Export Revenues and Figure 9-10. Saudi Export Revenues and Foreign Currency Reserves, 1960-2005, in Foreign Currency Reserves, 1960-2005, in
Billions of Current DollarsBillions of Current Dollars
Source: World Development Indicators 2007; and Saudi Arabian Monetary Agency, Annual Report, Monetary and Banking Statistics.