Artisans of the New Republic: Tradesmen of New York City in the Age of Jefferson

OPEC revenue soared from $14 billion in 1972, $23 billion in 1973, and $96 billion in 1974. OPEC demanded a 70% price increase and reduced oil production by 13%. The OPEC tightening of supplies quintupled their income and they demanded Israel withdraw from occupied territories. Saudi International reserves were $14.3 billion by 1974 and $49.6 billion by 1976. Saudi tended to emphasize Arab rule over the old city of Jerusalem with its mosque of Omar. Saudi was concerned over the increased flow of Soviet weapons to Cairo, Baghdad, and Damascus. America's media dramatized the prospects of an Arab oil weapon. Middle East experts in the state department endorsed the doctrine of "balance of power" and pushed for recognition of resolution 242, "Palestinian State". The Palestinian state legitimized Arab claims to land and was case against Israel. Major oil companies provided the funding for the media claim of an oil crisis. The oil companies feared the wave of nationalism spreading over the Middle East from Algeria too Libya. This wave of nationalism threatened too undermine the whole structure of Middle Eastern oil and retreat was not possible, as domestic oil production levels had dropped. On Apr 18, 1973, Nixon terminated a 14-year program of import restrictions. These import restrictions had protected America from a flood of cheap imported goods. By 1980, OPEC had decrease oil production by 14% and by 1981 OPEC had $265 billion. During the Iran-Iraq war, each side attacked each other's oil installations causing a sharp drop in oil production. Nigeria and Libya also experience a drop in oil production and cut oil production by half to prevent prices from falling from all time high. When governments are paralyzed by revolution or when two or them are at war, the prices rise even more steeply - all by itself in response to market pressures. The Iran revolution flooded OPEC countries with money. Oil rich Gulf Company's risks were enormous as oil prices rose sharply. Sharp climbs in oil prices meant lower sales and represented a powerful incentive for companies too make a huge investment into alternative fuels. The world companies would be forced to spend hundreds of billions of dollars on alternate energy and would be unlikely to switch back too oil, even if the price dropped; essentially making oil worthless. The rise in oil prices caused the 1975 recession and OPEC oil production dropped 10% and Saudi dropped by as much as 17%. Oil companies could not set price or determine customers; they were downgraded to a profit sharing technician, whose job was to pump the oil and ship it.