Many international economists felt that OPEC would not last. It has proven strong throughout its creation. Much of the stability is due to Saudi Arabia’s willingness to use its power to maintain stability. From 1979-1981 prices rose as high as $34 a barrel because of the fear associated with the Iran-Iraq war. This “artificial" boom was followed by a period in which OPEC was not able to keep its prices stable. Prices fell to $18 at one point. This was another indication that OPEC had still not reached the level of control they had hoped for.

The Middle East will always be loved or hated by many based on what gas prices are doing. OPEC, as long as it exists, will always have to ability to stir up chaos with one decision. Non-the-less the rest of the world is continuously trying to devise new methods for alternative fuels. The region of Third World countries has come a long way from its production of 5% of the world’s oil to the 90% it was at its panicle to now the 40% of the industry it controls. That region of the world was blessed with the fortune of easily accessible oil. It is utilizing ever bit of its luck.

e producing nearly 50% of the non-communist world’s oil.

At one point OPEC controlled 90% of the world’s oil industry. It has fallen from that high point at its creation to 40% of the industry now. This decline is partly due to the North Sea, Alaska, and Mexico stepping up in their production. Deficits in Saudi Arabia and Kuwait had begun drawing on their foreign reserves. In Iran and Iraq the Gulf War caused such horrendous material losses that the two countries were no longer seen as the more prosperous of the Third World countries.

The closure of the Suez Canal from 1967 to 1975, and the intermittent closure of the Syrians encountered of the pipeline going across their territory were causes for the first complete reversal in the international oil market that favored the oil producing nations. These two events caused a shortage of approximately 25 million tons of oil for Europe. This shortage placed a premium on the oil of Libya in the spotlight. At the time Libya was being run by the anti-Western Colonel Qadaffy. He played his card right and was able to increase the price of gas due mostly to supply and demand economics. The three biggest Middle East producers caught on to this tactic and negotiated through their experienced and Western-trained oil ministers. They comprised the Tehran agreement of 1971. The agreement secured a small increase in prices and was supposed to run until 1976. However in 1973 the third Arab-Israeli war broke out. Normally, the countries tried not to mix business with politics but Saudi Arabia felt the United States was playing dirty so

Some topics in this essay:
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