oil boom bust cycle pg 571 572 pg 585
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Turnmoil and Progress

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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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oil economics
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.
oil economics1
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.
boom and bust oil cycle
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.
boom and bust oil cycle1
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.
persian gulf war
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.
summary
Summary
  • Define the “Boom- and Bust” cycle.
  • Trace the impact of the “boom-and bust” cycle in the oil industry.
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