There are several things that come to mind when presented with the picture and topic, but the one that stands out most is shortage. However, shortage is an ironic word to use for it. It wasnt really a shortage in the fact that the world is out of oil, which being a non-renewable resource will be one day, but it was an incredible 130% increase in price by OPEC, Organization of Petroleum Exporting Countries. This forced the petroleum market to head into a tailspin.
OPEC, started by the major oil producing countries in the Middle East, was designed to give price control to the oil producers, instead of the oil manufacturers. Formed in 1960, OPEC was only a middleman for 10 years, but in the 1970s, they found the right time to drive up the price of gas. One viewpoint can say it was about time that we started paying these countries for what they were up to that point, giving us, but from the other standpoint, OPEC is no more than a cartel and monopoly. A cartel is two or more parties, the oil producing countries, hurting an innocent third party, oil consumers.
OPEC was created to hurt the oil manufacturers who were taking advantage of the oil producers, but unfortunately the one that got hurt from the agreement are the oil selling stations and us, the consumer. There are several reasons why it isnt the manufacturers didnt get affected by any of the price raises. First of all, no matter how high the price of crude oil goes, the world still has to keep buying oil products. In fact, the world is using more petroleum products now than it ever has before, and can only get it from a few manufacturers, which means a monopoly is feeding an oligopoly.
Monopolies are when the economy relies on one source for all of a product, also called a trust. Monopolies are banned in the United States by Anti-Trust Laws. Oligopolies are products, that the economy relies on, that are only available from a few sources. In a large market, the oil market, these companies can raise prices for consumers and receive massive increases in their profits. To really understand the hardships that happened in the 1970s, and not being around in that time, we can look at the situation we are experiencing today. Although we are not having the shortages, we are still having the problems with inflated oil prices.
However, not all things have resulting from the oil embargo have been bad. Cars are being designed to get better gas mileage, and buildings to be more energy efficient. There have been some economic analysts predicting that oil prices were going to rise like they did again this year, due to the low price of oil last year. Unleaded gasoline prices were down to around a dollar per gallon, and with the surge of gas buying last summer when prices were down, the surplus of oil became a shortage, therefore driving the price up to new levels.
The picture of the gas pumps is a small picture, but trying to put the whole picture into three pages of text was a difficult thing to do. For there are many topics that the oil market covers, but can best be summed up as this. Don Roberts was out of gas at his station because the oil manufacturers cheated the oil producers, and when the oil producers finally got together to get back at the manufacturers, they ended up taking their problems out of consumers.