The Future of OPEC
When the Organization of Arab Petroleum Exporting Countries (OAPEC) announced the Arab oil boycott against the United States and its Western allies as retaliation for supporting Israel in the Arab-Israeli Yom Kippur War of October 1973, political experts and pundits ridiculed the attempt as inept, puerile, and destined to fail. They refused to take the threat seriously. The Wall Street Journal in its October 16, 1973, editorial asked the Arab states to call off the oil "bluff," and pointed out that, since Saudi Arabia provided only 350,000 barrels of oil a day, or just over 2 percent of the U.S. oil supply at that time, the Arab ministers would be unable to design an embargo that could hurt the United States without also hurting other European countries and, ultimately, the Arabs themselves. The newspaper warned the Arab states of the danger of forever cutting off Arab access to the "lush" American energy market. And President Nixon's then consultant on energy matters, Charles J. DiBona, went as far as to say that an extended interruption of the oil supply "would well be in our long-run best interest" because it would "stimulate intense public efforts to increase supply and reduce demand." 1 But the Arab oil boycott was deadly effective. It created complete chaos and disrupted the U.S. economy badly because it reduced the flow of Middle Eastern oil from 1.2 m/b/d in September 1973 to a bare 19,000 barrels a day through January and February 1974.
Most people in the United States and abroad did not believe that there was a genuine oil shortage. Ralph Nader pronounced: "The world is literally drowning in oil," and the shortages in the United States and the accompanying price increases were nothing less than "unarmed robbery by oil companies in collusion with Government support." The situation was