G'day Mark,
Just in case it's useful, here's one I sent to Thaxis on the '73 shock.
It'd be interesting to see how close Yann Fitt's analysis of the time was to
Kubursi & Mansur's twenty years later.
>>Blaming it on an oil cartel amounts to more hogwash
>>since this argument, if you can call it this, fails to identify the cause
>>of the cartel being able to hike up prices now.
>
>Hear hear! And this is why blaming OPEC for the 1970's crisis is also
>hogwash, and both have an anti-semitic tinge to boot...
Depends who you mean by oil cartel, I s'pose. Sure, you could mean a bunch
of ministers from oil producing countries (not all of whom hail from the
middle east, anyway), but you could also be referring to oil companies - who
managed to make a very tight-knit community out of themselves earlier in the
century (and are intent on making it tighter still) - and who have enjoyed
the political clout of, primarily, the US government in furthering their
interests - which they do not always correctly perceive.
Witness Kissinger's desperate and ultimately dangerous attempts to keep the
middle-eastern states from becoming too cohesive and independent a political
bloc. Furthermore. the US government's political goals were also about
attacking the rapidly advancing economies of Europe and Japan. It was State
Department policy wonk James Akins who first demanded that prices increase,
after all, to which US Treasury under-secretary William Simon responded that
making OPEC a bit richer would be fine, as the proceeds would eventually be
'recycled' through US finance institutions, anyway. Europe and Japan,
unlike the US, were not oil producers. So their production costs would go
up without compensation, whilst US costs would be compensated by increased
returns on its own oil production.
And the big oil companies were big beneficiaries of higher prices for a good
produced at very low marginal cost but also of very low price elasticity -
and their CEOs were very close to Nixon, too (see Kubursi and Mansur's
article in Stubbs et al's *PE and the changing Global Order*).
Cheers,
Rob.
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