OPEC, the Petroleum Industry, and United States Energy Policy

By Arabinda Ghosh | Go to book overview

10
Facing the Energy Crisis: U.S. Policy Under the Nixon-Ford Administration

1.

Despite all the doomsday language and crisis-laden rhetoric, the U.S. Government could not formulate a comprehensive national energy policy until President Carter's presentation of a bill in 1977. When the Arab oil embargo was imposed in October 1973, the Nixon administration was caught unaware and without substantial reserves of oil. The long lines for gasoline and the doubling of gasoline prices at the retail level occurred almost instantly. As the crisis lingered on, President Nixon unveiled his scheme of Project Independence to make the United States self-sufficient in energy by 1980. But with the intensification of the Watergate affair and the virtual paralysis of leadership in the White House, Project Independence did not have a chance to get off the ground and become a realistic blueprint for energy solvency. The administration faced the fourfold price increase and the ensuing economic recession with stop-gap measures.

The first short-term measure the Nixon administration adopted was controlling the price of oil produced from U.S. wells brought in before 1972. The program was instituted under the 1971 Economic Stabilization Program. Throughout 1972, the Price Commission allowed no price increases for crude oil and petroleum products. But with Middle Eastern oil prices rising fast and the country experiencing shortages of heating oil and gasoline, the Cost of Living Council, in August 1973, adopted a two-tier pricing system for crude oil. A ceiling of $4.25 a barrel was applied to "old" oil, which was defined as the 1972 volume of production from any property producing in that year. Production above that level could sell at any price, as could oil from leases that began producing after 1972. These two categories were called "new" oil.

As an incentive to increase production from old leases, the council exempted from the ceilings a volume of old oil equal to new oil from the

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OPEC, the Petroleum Industry, and United States Energy Policy
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Figures ix
  • Tables xi
  • Preface xv
  • Abbreviations xvii
  • 1 - Introduction 3
  • Notes 16
  • 2 - The Emergence of Opec 17
  • Notes 35
  • 3 - The Pricing Mechanism of Opec 36
  • Notes 49
  • 4 - Opec and the Multinational Oil Companies 50
  • Notes 64
  • 5 - U.S. Oil Industry: Changing Structure and Performance 65
  • Notes 87
  • 6 - U.S. Oil Industry: Acquisition and Diversification 89
  • Notes 106
  • 7 - Petro-Dollars and Economic Change in OPEC Nations 107
  • Notes 132
  • 8 - Opec versus the Oil-Consuming World 133
  • Notes 148
  • 9 - Strategy against Opec: Henry Kissinger and the Energy Crisis 149
  • Notes 160
  • 10 - Facing the Energy Crisis: U.S. Policy under the Nixon-Ford Administration 161
  • Notes 174
  • 11 - Presidents Carter and Reagan and the National Energy Policy 176
  • Notes 187
  • 12 - The Future of Opec 188
  • Notes 197
  • Selected Bibliography 199
  • Index 203
  • About the Author 206
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