CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS?

Can OPEC Influence How Much We Pay for Gas?

Brandon Kovach

Everett Community College

Author Note

This paper was prepared for Intro to the Middle East 187D, taught by

Professor Christina Fusch.

CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 2

Can OPEC Influence How Much We Pay for Gas?

After months in the making this year OPEC shocked the world and finally

agreed on lowering the amount of oil they would produce. This is the biggest

production cuts they have made in over eight years and the reason for it is because

people will pay more money when there is less oil. How did all of this start and what

does it mean for OPEC and even America? To get some background, OPEC stands for

Organization for the Petroleum Exporting Countries. This organization is a group of

oil producing countries from almost all over the world that have come together to

better control the output of their oil and provide benefits for its members. Its

entrance into the oil market has given Middle Eastern countries the ability to

negotiate with foreign countries and has ultimately affected how countries all over

the world buy and sell oil. OPEC has humble beginnings which began when Middle

Eastern countries wanted to form a cartel that would control the price of oil to make

them rich. This led them to employ different strategies to control the output of oil

into the global economy. One of the strategies they use to accomplish this is cutting

production costs to raise the amount of money that people pay for each barrel.

Since OPEC owns almost a third of the oil market, a price increase of large sizes has

major effects on almost every country. People are worried that these production

cuts will create high oil prices that will last for a very long time, but history has

shown us that this is not the case because other oil producing countries will offset

the cuts and allow prices to become stable.

OPEC was founded in September 1960 in the city of Baghdad Iraq. The first

founding members were Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela who

represented the Middle East and South America. After its founding many other

countries from Africa and Southeast Asia joined the organization. The reason the
CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 3

founding members made the alliance was so that they could change the price of oil

to acquire more income from their oil fields (Brief History, par. 1). Since they wanted

to rig the price of oil they are considered to be a cartel which is a group of

producers of a product or material that come together to fix prices in their favor.

Unfortunately, the oil market was not very receiving and made it very hard for OPEC

to change prices because oil distributing companies didnt take them seriously and

more importantly because each country only wanted the prices to change in their

favor. Some oil companies would announce their support for OPEC, but then would

make special deals with the different countries that were members of OPEC. These

rivalries among the countries in OPEC made every one of the time to think that

OPEC would never succeed, but they were totally wrong.

About 10 years after the founding of OPEC, their persistence finally started to

pay off because oil was finally becoming the major resource that everyone wants

just like today. It was this new found hunger that the world had for oil that pushed

OPEC into its Golden Age. The oil producers were now the ones controlling the

prices, no longer could oil companies demand that they would only buy oil at a

curtain price. At the time OPEC held 80 percent of the worlds oil, so many of these

companies either had try and look for a better deal from a small producer or if they

wanted more oil they would have to do business with OPEC. OPECs golden age took

place from about 1974 to 1978, and started at Tehran Iran, when the countries in

OPEC met and had a long discussion about how a huge increase in the price of oil

would impact the global economy. According to Wagner (2009), they finally agreed

to raise their price to 11.65 dollars per barrel when at the time the price was only

5.12 dollars per barrel (Wagner, pg. 50). Finally, the countries in OPEC experienced

four really good years of income from oil. The biggest issue was that the people who
CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 4

became very rich didnt use the money to stabilize the economies in their countries.

Instead it was an era where many elaborate palaces, weapons, and cars were

bought. It finally ended when OPEC could buy anything else because they had

spent around 69 billion dollars and were in debt by 2 billion dollars. Since oil was

such a lucrative industry more people had started digging up their own oil. This

meant that OPECs share of the oil market had shrunk to only 40%. Although, the

biggest issue that this organization had never overcame was the fact that its

members couldnt work together and always tried to find ways to improve only their

own profits.

Before OPEC had the ability to influence the price of oil they had to figure out

how to work together as a functioning organization. To understand how OPEC makes

its decisions about why and how much they try to change oil prices, it is important

to look at how they work together. Sadly, Middle East countries have always had a

hard time agreeing with each other because each country had its own plan to

become the richest nation. This squabbling among themselves continued to the

point where on August 2, 1990 Iraq sent troops to Kuwait to take it over. Saddam

Hussein was hoping that by taking over Kuwaits oil fields they could pay off their

debt after the eight year Iran and Iraq war. Wagner (2009) mentions in her book

that the scary truth was if Hussein had been successful, Iraq would have had control

over twenty percent of OPECS production and twenty-five percent of the worlds

reserves (Wagner, pg. 58). Seeing what would happen if Saddam took Kuwait, the

U.S. decided to protect its best interests by defending the country from invasion.

Most importantly, the nations of OPEC felt threatened by Iraqs move because not

only was a member attacking another member which would hurt oil prices, but it

threatened each countrys right to be a separate nation. If one country in OPEC took
CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 5

control over other countries what would stop them from taking more countries in

OPEC until it was only one nation? Thats why OPEC supported Kuwait by increased

production to compensate for the loss by Iraq and Kuwait. Still this shows how much

influence OPECs oil production has on the other countries because despite their

effort to sustain the production levels the price of oil still started to climb at an

unnerving rate.

To see what OPECs price cuts does to other countries we can see how

America has been affected since we rely on so much of the worlds oil. Jennifer

Weeks (2012) mentions that during the 1970s, oil consisted of 34 percent of the

energy used in America, which is much bigger than any other form of energy. The

reason why America relies so heavily on oil is because the culture and economy

makes it immensely more convenient for people to use cars as their primary form of

transpiration. In fact, 94 percent of vehicles at the time used oil to get around

(Overview, para. 5). Over the last four decades politicians in America have been

voicing their opinion on how to rely less on imported oil. One strategy many political

figures use is to push for more relaxed oil exploration laws so that we can drill more

oil domestically. The biggest issue is that a lot of the oil fields in America are

becoming depleted making oil harder to get to, which would lead to the increase of

oil prices. So until a solution was found, oil continued to be imported especially from

Middle East countries. Although, this decision has caused problems for America

because they are so heavily invested in the political outcomes in the Middle East.

They quickly learned not to choose sides in a war against the ideals of the countries

aligned in OPEC.

Of course, OPEC doesnt live in a vacuum and only sell oil to nations in the

Middle East. They play a big hand in affecting the economies of even the biggest
CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 6

nations like The United States of America. In the 1970s America was starting to rely

heavily on oil as cars and other gas vehicles were becoming more popular. Also at

the time, there was another conflict between the Arab nations and Israel where

America decided to back Israel by giving them weapons and ammunition because

the Soviet Union were backing the Arabian nations. Naturally, a large amount of the

countries involved with OPEC were either one of these Arabian nations fighting

Israel or they supported them. So this lead to the first discussions about using oil as

an economic weapon. They finally came to the agreement that because America

was providing weapons they would have to suffer the consequences by cutting the

amount of production they would sell America. Soon after that they also agreed to

raise the price of oil by 70 percent to 5.11 dollars a barrel (Wagner, pg. 43). This

caused America to fall into the biggest oil crisis in its history. In fact, it was so bad

that people had to either set an appointment or were only allowed to go to the gas

station on curtain days of the week. After a year of rebuilding its supplies, American

officials had oil reserves build to protect against any production cuts in the future.

This specific scenario demonstrates that when the members of OPEC are brought

together by a common goal, they can have a giant impact on the nations it is

dealing with.

According to Bill Chappell (2016) in November of this year OPEC agreed on

cutting the amount of oil they are producing by 1.2 million barrels of oil each day.

This news was very surprising to many people because production cuts at this

magnitude hasnt been done since 2008 (Chappell, para. 1-5). One of the possible

reasons for the large gap between when they made this decision was because each

of the countries only wanted to raise prices for their benefit, so they could never

agree on an outcome. OPEC also managed to negotiated with another of the worlds
CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 7

oil producing powers which is Russia. They agreed to cut their rate of production by

about 300,000 barrels of oil a day. These production cuts are significant because

they will affect everyone. When a lot of oil producing countries, like OPEC, cut the

amount of oil they are producing, people will pay more for the oil they have because

there is less of it in circulation. OPEC says its goal with this deal is to bring stability

to the oil economy which is always changing due to the unpredictable amounts of

oil that countries produce. Although based on OPECs history and the strategies

they use to control the market, they are most likely also trying to control the price of

oil so they can make more money.

At the beginning of OPECs existence, their goal was to raise the price of oil to

acquire more money from selling petroleum. As they found out soon after it was

hard for the countries to come to an agreement on the price they should change it

too. Instead, they found their best strategy was to use sanctioning, which is when

they refused to sell oil to countries they are in conflict with. OPEC found that it can

use its oil production as a weapon to give them leverage in many situations like war.

Although, the effectiveness of sanctioning varies depending on the availability of oil

and the financial state of that country. This means that sanctioning can also backfire

hurting OPEC in the process if they dont do it at the right time. Van De Graf (2013)

explains in his article that sanctioning can be a double edge sword because if they

stopped selling to a specific country they would lose a little bit of money because

they arent selling as much. It also can raise the price of oil because not as much oil

is being put into circulation (Van De Graf, pg. 160). Oil producers are not the only

ones who can refuse to sell oil to other nations. It also works the other way around if

a petroleum buyer refuses to buy oil from a source. A great example of this is

represented in Van De Grafs article on how Americas sanction on Iran affected the
CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 8

economy. Since America didnt by oil from Iran they had a net loss of 40 million

dollars that year. The biggest discovery though wasnt that they sold less oil, but

because Iranian banks werent getting as much money from the oil producing

companies. After a few attempts at sanctioning OPEC found a new strategy would

allow them to have more control and influence over their income.

OPEC produces almost a third of the worlds oil which means that they have a

lot of influence over the market. Come to find out along with trying to control prices,

OPEC also plays a big role in stabilizing the oil market. They do this by imposing

quotas on each of the countries within OPEC to accomplish this goal. Quotas are just

like goals that they set for each country so that they can predict the amount of oil

that each country should produce. They do this for multiple reasons, the first of

which is because this helps them control production of oil so that if one of the

countries started slacking they could easily raise the quota to help pick up the

slack. Secondly, by having better control over its output it allows them to predict

the amount of barrels that theyll sell so that they know how much countries will

pay for their oil. Unfortunately for OPEC, since all of the countries are always trying

to take advantage of each other, a lot of them have a hard time meeting their

quotas. In 2015, researchers Linab, Omojub, and Okonkwoc, said that Saudi Arabia

uses a strategy called the tit-for-tat strategy. Since Saudi Arabia is the biggest oil

producer in OPEC they are able to meet their quota and produce extra reserves.

These reserves are then used to pick up the slack of any of the other countries that

arent meeting their quotas (Overview of OPEC market stabilization strategy, para.

3). This use of quotas has allowed OPEC to stabilize its output of oil even if a

country doesnt meet their quota because it is in the middle of a revolution, which
CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 9

has happened more than once. OPEC uses a lot of different strategies to get better

profits, but what impact do they have on the price of oil?

Especially with the recent events people think that OPEC has full control over

the oil market. So this begs the question what impact has OPEC had on the price of

oil? To start, OPEC revolutionized the way countries buy and sell oil from producers.

Before, countries had to pay the money that oil suppliers decided was best and oil

producers, like the countries in the Middle East, would only be paid for what the

suppliers thought the oil was worth. Although once OPEC entered the scene all of a

sudden oil was a competitive product. Now oil suppling organization have to look for

sources from all around the world to find the best seller. An article from Robert

Barsky and Lutz Kilian (2004) about how oil prices affect countries health, make a

point about how cartels like OPEC play a role in the global economy by stabilizing

and sometimes stimulating the market (Conclusion, para. 1). This means that

because OPEC holds such a large amount of the worlds oil reserves, it has the

power and responsibility to influence the wellbeing of countries that buy their

exports. This outcome is even reflected in OPECs mission statement. As an

organization OPEC aims to work with its founding countries to unify their output and

stabilize the oil market. So throughout OPECs existence they have revolutionized

and played a hand in stabilizing the global oil market. Due to the recent production

cuts, people are worried that OPEC has full control over the market and will raise

prices indefinitely, but this is not the whole story.

Now since OPEC holds a lot of the worlds oil reserves, they should be able to

have a lot of control over the oil market, right? Well not exactly, because research

has shown that in spite of OPECs strategies to control oil prices, they rarely are able

to make major changes to the oil market. For example, OPECs sanctioning of oil
CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 10

from the U.S. had a huge impact on Americas economy, although other than that

the organization hasnt managed to directly influence the oil supply of any other

countries. OPEC is considered a cartel which means they should be playing a big

role in determining the price of their product. According to Jeff D. Colgan (2014),

who wrote an article about the limits of OPEC in the global oil market, in order for a

cartel to be successful at controlling the price of the market it needs to set hard

production goals (Introduction, para. 2). In OPECs case, they havent even been

able to complete the easy goals that they set for themselves because the countries

dont always meet their production quotas. If OPEC isnt controlling prices like how

that people say they are, then why do they still exist? The answer is because the

organization gives its members political benefits. It has been found that countries

with OPEC status have more ambassadorial representation from other countries,

meaning other countries are paying more attention to them. So OPEC may not in

practice be able to directly control the oil market because of the instability of the

Middle East and because they are unable to meet their set quotas. So what does

this mean for OPEC today and how they interact with the nations who buy their oil?

As stated before, OPEC may not have as much control over that oil market

today than most people think. Although, OPEC still holds almost a third of the

worlds oil reserves. At this point in time if OPEC is not able to meet the production

goals than it will have a hard time influencing the price of oil. The sad truth is;

OPEC is slowly losing in the race to provide the best deal on oil which has made

them less appealing to other countries. One of the biggest reasons for this is

because of the civil war in Syria and the American troops in Iran have made the

consistency of their supplies very unreliable. This makes it harder for OPEC to set

aggressive quotas because its members can be unreliable due to war and political
CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 11

issues. Kaushik Bandyopadhya (2008) wrote an article on if OPEC is losing control

the petroleum market. He also adds that one of the reasons OPEC could be losing

control over the market is because other countries like Russia are drilling in new

fields which means that OPEC has more competition (Conclusion, para. 2). What this

means for OPECs future is that they need to start working together to meet their

quotas so that they become more competitive in the market. Luckily for them, oil

fields all over the world are starting to run dry meaning companies need to pay

more money to get to the oil that is miles deeper. This gives OPEC an edge where

most of the countries suppling the oil still have plenty of oil left in their fields.

This year OPEC nations came together and put aside their differences to

agree on one of the biggest production cuts in years. These production cuts could

have repercussions for many nations with especially, America. Although, this time

weve learned from our mistakes and have reserves to absorbed the sudden

changes in production. Still if history hasnt shown us anything its that OPECs

control over the petroleum market hasnt been as much as people fear. That means

that the same people shouldnt worry about the price of oil in the long run because

even though the price might go up a little, they will eventually stabilize over time.

Even if OPEC dont have that much control over the market, they still hold a lot of

the worlds reserves, and petroleum fields in other countries are starting to dry up.

Never the less, in order to stay competitive OPEC needs to engage with other

nations and cultures to ensure that they can keep up with the change that happens

in the world.

Reflection
CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 12

This topic was very fun to research and learn more about how OPEC allows

Middle Eastern countries to do business with organizations and countries from all

over the world. I liked that I was able to share about why OPEC is still relevant and is

making an impact on even my life. Having the bibliography and progress report

assignments were also a great help because it kept me on track so that I knew

exactly how much time I had to research and write it. Of course, it wasnt all smooth

sailing from beginning and end. What I mostly dislike about how my paper turned

out was that it turned more into a general economy paper than I wanted. On the

plus side I think I did a good job tying in numbers with information that is relevant to

the Middle East and how diverse the market is. I wouldnt be surprised if a lot of

student have a hard time with sources just like I did. Although, I found great

resources online that had a lot of papers written about OPEC and found some books.

All in all, I learned a lot about OPEC and how the countries of the Middle East are

using one of the biggest resources of the world.

Bibliography

Bandyopadhyay, K. (2008). OPEC's Price-Making Power. Economic and Political

Weekly, 43(46), 18-21. Retrieved from http://www.jstor.org/stable/40278171

The question that this source is trying to answer is if OPEC has lost its control

over global oil prices. It explains that over the years OPEC countries dig up

much more oil than they are going to sell, so they store it. That way if the

prices went up they had reserves to introduce into the economy, thus

lowering the price of oil. Although, it has been found that, like in 2004, other

countries like Russia started getting into the oil producing game. With more
CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 13

competitors to OPEC they found that they were losing dominance over the oil

economy making it costlier to control prices.

Dr. Bandyopadhyay has a Ph D in Economics from Jawaharlal Nehru University

and has 17 years of research and teaching experience. He mainly focuses on

topics like business sustainability, corporate social responsibility, energy

pricing, sustainable transportation, urban and rural energy transition,

reforming fossil fuel subsidies, and the nexus between trade. He has a lot of

experience dealing with economics of fossil fuels in many different countries

all over the world. In his article he includes many references that he acquired

to make his conclusions about the state of the OPECs grasp on the global

economy.
This source expands on my topic because it talks about how differences in

countries objectives has made OPECs control sloppy. Some of the countries

in the alliance have large deposits of oil like Saudi Arabia who is one of

OPECs major producers, but it also has a lot of countries that dont produce

nearly as much. This causes the countries that dont produce a lot to have

large recessions when oil prices become too high. This leaves big producers

like Saudi Arabia picking up their slack which in some cases cant be dont

because they cant produce oil fast enough.

Barsky, R, Kilian L. (2004). Oil and the Macroeconomy Since the 1970s. Journal of

Economic Perspectives, 18, 115-134.

This source discusses the impact of oil shocks in the Middle East on the global

macro economy. Backed by research from many academic sources this article

talks about how it looks like there is a trend between when oil prices rise and

the economy goes into a rescission. It all starts in the Middle East where

usually wars and political divide causes prices to go up. That is one of the
CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 14

reasons why OPEC was founded, to help reduce oil shocks in the Middle East

economy. According to this article there seems to be a relation between oil

shocks in the Middle East and a global recession, but it is not the oil shocks

alone that cause this. In the end it a bunch of different economic factors that

cause global economic resections, although oil shocks are one of those

factors.
The author of this article is Robert Barsky, who is a senior economist and

research advisor at the Federal Reserve Bank of Chicago. He is also a part of

the macroeconomics team in the economic research department at Federal

Reserve Bank of Chicago. He has written many papers on the economy of

regions all over the world. To back up his findings, Barsky lists references

from other creditable papers from professionals who analyses the cause and

effect of production like oil and how it effects other economies.

This source is relevant for my topic because it discusses how the impact of oil

shocks in the Middle East affect the economies of other countries. Oil shocks

can be caused by many factors but usually occur due to the Middle Easts

political instability. Wars play a big role because as civil wars and terrorist

groups fight for land they acquire different oil fields. This change in ownership

can cause prices for oil in the Middle East to rise. It has also been observed

that the rise in oil prices matches the global economy. For example, in

America when prices rise other industries have a harder time producing more

products which creates a chain reaction that can lead to a major recession.

Chapell, B. (2016, November 30). OPEC Agrees to First Cut in Oil Production Since

2008. National Public Radio. Retrieved from

CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 15

http://www.npr.org/sections/thetwo-way/2016/11/30/503863756/opec-agrees-

to-first-cut-in-oil-production-since-2008

This source is about how OPEC has very recently agreed on cutting the

amount of oil they are producing. Their plans are to cut production by 1.2

million barrels every day starting January 1st of 2017. One of the surprising

things about this report is that Russia has also agreed to cut their production

as well. Of course, this decision didnt come to a conclusion without any

hiccups, but since Indonesia imports a lot of oil form OPEC it has decided to

sit out the production cuts. This source states that these production cuts will

create more demand for OPEC imports.

This source is very reliable because it was written by an author who has a lot

of experience in finding the right facts for new events and telling them. Bill

Chappell is heavily invested in NPR and their online platforms. He has put in

years of editing, producing, and writing articles on the events that happen all

over the world. Although, this source is not a primary source it is still reliable

because it has quotes from people who were actually at the event where

OPEC agreed on the production cuts.

This source will help make my paper more specific because it talks about a

recent even that will prove to change the way we see oil prices today. OPEC

has lowered production because it will create more demand for OPEC from oil

causing people to pay more money for their oil. As well as create more

demand and profits for OPEC, this source talks about how OPEC is also trying

to bring stability to the market.

Colgan, J. D. (2014). The Emperor Has No Clothes: The Limits of OPEC in the Global

Oil Market. International Organization, 68(3), 599-632.

CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 16

This source talks about whether OPEC actually has a hold on the oil market.

The author Colgan states that people believe that OPEC is a cartel. A cartel is

a group of people that work together to lower production of their product to

control the prices. The thing is to control prices the group members need to

have a large share of their respected economy. For OPECs case, they dont

make enough of the worlds oil that by holding back they can drastically

change the price of oil. That begs the question that if OPEC cant really

control prices than what is the alliance good for? The author answers this by

saying that OPEC makes political benefits by being able to interact with

domestic and international audiences.

Jeff D. Colgan is the Richard Holbrooke Associate Professor in the Department

of Political Science and Watson Institute for International Studies at Brown

University. His main area of research is the political economy of international

security, and how it relates to energy politics. He also has a large list of

creditable references from other studies of research on the topic.

This topic is talking about the impact that OPEC has on the Middle East as

well as the global economy. This article explains that contrary to what others

think OPEC doesnt have as much control as people think. The author

mentions that it had a role in the oil crisis of 1973, but that after that its role

in the oil wasnt as great. One of its main purposes is to coordinate

production in the Middle East to get the most income for the countries

involved in OPEC. They also serve to be a communication between oil

distributers of other countries and the Middle East.

CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 17

Linab, B., Omojub, O., Okonkwoc, J. (2015). Will Disruptions in OPEC Oil Supply Have

Permanent Impact on the Global Oil Market. Renewable and Sustainable Energy

Reviews, 52, 1312-1321.

This article discusses whether OPEC will have a permanent or temporary

influence on the global oil economy. It explains that OPEC uses a quota

strategy on its members to grow their income. This means that OPEC agrees

on an amount of oil that each country has to produce to meet their quota.

Deciding this allows OPEC to control the prices in and outside the Middle East.

For example, they can require countries to produce a lot of oil. This will lower

the price of Middle East oil which means other countries will stop buying oil

from America or other regions because OPECs oil is cheap.

All three of the authors of this article got their degrees at Xiamen University

in China. Linab is a part of the China Institute for Studies in Energy Policy,

Omojub works with the China Center for Energy Economics Research, and

Okonkwoc at the Wang Yanan Institute for Studies in Economics (WISE). These

authors work in the field of energy in the worlds economy and have written

many articles on it. The sources are filled with research gathered from other

creditable studies and has them listed in the Bibliography.

This source is appropriate for my topic because it talks about how OPEC uses

the production of its many different counties to control a large quantity of the

oil economy. For example, Saudi Arabia is one of the major producers of oil in

OPEC. Because of this it can compensate for other countries inabilities to

meet their quotas. That means it plays a major role in stabilizing the price for

the global market.

CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 18

Organization of the Petroleum Exporting Countries. (2016). Brief History. Retrieved

October 19, 2016, from http://www.opec.org/opec_web/en/about_us/24.htm

In this source OPEC gives a summary of theyre history. It talks about how in

1960 OPEC was founded to secure fair and stable prices for petroleum

producers. OPEC then begins to compete with the other oil producing

companies at that time. When prices rose in the 1970s OPEC had its first

meeting in Algeria. After recovering, prices crashed in 1986, the smaller

countries apart of OPEC fell into deep economic troubles. Up till now OPEC

has been working to agree on and help maintain policies to keep income

coming into OPEC affiliated countries.

This is not and academic source because it doesnt include research notes or

a bibliography. Although this is a reliable source because the information

about OPEC comes from the organization themselves. The information

presented is gathered from countries that have participated in the parts of

history in the source.

This source provides great information regarding my topic because the

information on their policies and history comes straight from OPEC

themselves. Like according to the web page OPECs objective is to work with

the member countries to make fair and stable prices for oil producers,

achieve regular supply of petroleum to consuming nations, and ensure a fair

return to those investing in the industry. It also talks about how in the wake of

rising oil prices they were able to come together and help stabilize the

market for the countries involved.

Wagner, H. (2009). Global Organizations: The Organization of the Petroleum

Exporting Countries. New York, NY. Chelsea House Publishers.

CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 19

This book describes the oil market and how the Middle East dominates one

third of that market. It also talks about OPECs founding and how they

negotiated with other oil companies on oil prices. Then it touches on how

OPEC decided to raise prices themselves leading America into an oil crisis.

From their it discusses OPECs golden age and how their control over the oil

has led to war between nations in the Middle East as well as other countries

outside. Lastly it talks about what OPEC is doing today and why that has

caused such a high price in oil.

This book is a great primary source because the author, Heather Wagner, has

written extensively on the Middle East and international policies. She has a

B.A. in political science from Duke University and M.A. in government from

the College of William and Mary. The book was edited by Peggy Kahn, a

professor of political science at the University of Michigan-Flint. On top of

that, the book includes a bibliography and notes of the information that she

has found.
This source is good for my topic because it explains the financial and ethical

decisions made by the OPEC and how it has affected the economy. For

example, in 1973 Israel was trying to protect from Syria who was trying to

take over the country. Of course, America had sided with Israel where as a

majority of the countries in OPEC were with Syria. So OPEC decide to limit the

amount of oil it sold to the U.S. and raise the price by 70% to $5.11 per

barrel. This put America in an oil shortage causing gas stations to have to

only let curtain people fill up at certain day of the week. This shows how war,

economy, and governments has allowed us to fill our cars with gas when we

want and has changed the lives of those living countries that produce oil.
CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 20

Weeks, J. (2012, June 22). U.S. oil dependence. CQ Researcher, 22, 549-572.

Retrieved from http://library.cqpress.com/

This source discusses U.S. oil supplies and how we are dependent of

foreign oil from places like the Middle East. The article explains that ever

since the 1970s the presidents have been trying to find a way to rely less

on imported oil. Some have proposed to make cars more efficient so we

use less, others say we need to drill more in our country. The problem is

America produces very little of the worlds oil but consumes more than 20

percent of it.
Jennifer Week the author of this article has an A.B. degree from Williams

College and master's degrees from the University of North Carolina and

Harvard. She is a specialist in energy, science, and the environment and

has written many articles on the subject. In this source she has also

included a lengthy bibliography that has books and articles from

companies and specialists in the field of Americas position in the oil

industry and how it effects the global economy.

This source provides a great perspective from Americas side and how its

energy problems are related to the middle east. Jennifer Weeks discusses

how political powers in America want to lower the price of oil by drilling

more in the country instead of importing it. Although to achieve better

energy security in this country it doesnt matter if we get most of our oil

from our own resources or from the middle east because oil prices are

determined on a global scale, the key is using less oil in general. Dealing

with countries in the middle east can lead to problems like the oil crisis of

1970 when OPEC decided to cut off supply to America because it was

aiding Israel.
CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 21

Van de Graaf, T. (2013). The "Oil Weapon" Reversed? Sanctions Against Iran and

U.S.-EU Structural Power. Middle East Policy, 20(3), 145-163.

This article is focused on one of the main strategies used by OPEC and many

other countries like America called sanctioning. This is basically when a

country or groups of countries decide to stop buying or selling oil from a

source. This article uses Americas sanction of oil from Iran to study the

effects that it has on the economy. In Iran the sanction of oil has slowed down

the amount of revenue that the country is receiving because its economy

relies so heavily on oil based exports. Although some consequences of the

sanctions are that it can changed the way oil is bought from other countries

which can raise oil prices.

Thijs Van de Graaf, the author of this article is an assistant professor in the

tenure track of International Politics at the Ghent Institute for International

Studies at Ghent University. Van de Graaf has written many publications

covering energy security, international politics, and global governance. He

has been a part of multiple groups dedicated to the study of global energy

governance. In the text he includes references listed at the end to many

studies done on the topic of Irans economy and Americas oil sanction.
This source expands on how OPEC and other countries use oil like a weapon

to hurt or help each other. The article talks about how sanctioning can be a

double edged sword sometimes. With the example of the sanction on Iran, it

hasnt affected their ability to sell oil that much because they still have some

major buyers. According to the research in this article the part of the

sanction that is hurting Iran is the sanction of banks and insurance. Its
CAN OPEC INFLUENCE HOW MUCH WE PAY FOR GAS? 22

interesting to see how sanctioning has affected countries in OPEC and their

buyers.