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Turnmoil and Progress

Oil « Boom & Bust » Cycle Pg. 571-572 Pg. 585. Turnmoil and Progress. Oil Economics. A group of foreign nations created an association to limit competition called the Oragnization of Petroleum Exporting Countries (OPEC)

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Turnmoil and Progress

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  1. Oil « Boom & Bust » Cycle Pg. 571-572 Pg. 585 Turnmoil and Progress

  2. Oil Economics • A group of foreign nations created an association to limit competition called the Oragnization of Petroleum Exporting Countries (OPEC) • In 1973 the Arab nations that supplied much of the oil ended shipments to the U.S. because of the U.S. Support of Israel. • The result an « energy crisis ». The price of oil and gasoline rose dramtically.

  3. Oil Economics • Motorists could buy only 3 days a week. • High gas prices stimulated the drilling of more oil wells and increased activity in other areas of the oil industry. • High oil prices lasted into the 1980’s.

  4. Oil Crisis 1973

  5. Boom and Bust Oil Cycle • High oil prices in the 1970s meant that the petorleum industry boomed. • Drilling compaines, pipe manufacturers, and oil well service compaines all shared in the resulting prosperity. • People moved to Texas in large numbers to find employment. • As often happens, « bust » followed « boom ». • Economic hardship gave way to hard times.

  6. Boom and Bust Oil Cycle • The weakening of the OPEC assocation and overproduction of oil lowered the price of oil. • Compaines cut back on drilling and fired employees. • Many people could not pay loans and Texas’s banks lost 3.7 billion dollars.

  7. Persian Gulf War • In 1990 Iraq invaded its oil-rich neighbor, Kuwait. • Iraq seemed to desire the oil of both Kuwait and Saudi Arabia. • In 1991 President George H.W. Bush assembled troops to drive Iraq out of Kuwait and protect the oil reserves of the region. • This operation was known as Desert Storm. • The Gulf War lasted slightly over a month.

  8. Summary • Define the “Boom- and Bust” cycle. • Trace the impact of the “boom-and bust” cycle in the oil industry.

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