EGEE 120
Oil: International Evolution




We will discuss the waning power of Britain and US in the Middle East, the environmental impact of oil use, and the challenges of oil production in Alaska, North Sea, and Libya. We will continue with discussions on the constant split within OPEC and its effects. This split continues between OPEC members as we review the 1990s Oil Wars and their challenges with exporting with little regard to the other members, in addition to expanding on ways to distinguish between concessions, participation or joint ownership, and nationalization with respect to ownership.

Then, beyond the oil companies and countries exporting oil, we discuss the tightening market condition and how it led to increased market prices. We will focus on Anwar Sadat, the 4th Arab-Israeli war, and the use of the oil weapon. The potential impact of the Watergate event on US policies and actions/inactions will be discussed. The impact of the OPEC production cuts and the oil embargo on consumers and nations, including the panic at the pump, the “equal suffering and equal misery,” and the strain in the alliance will be discussed, ending with a recurring theme, abundant available oil, and the price drop when we review the Jakarta Syndrome.

Major Lesson Themes

  • Mounting surplus of oil going into 1960s
  • Posted price cuts upset the balance
  • Limited OPEC market power
  • Elephants in Algeria & Libya
  • Mattei’s last flight & new competitors
  • Iran vs. Saudi Arabia
  • American oil import quotas
  • Oil and international politics
  • Big change: Lack of spare capacity in U.S.
  • OPEC gains market power and uses it for political reasons
  • World economy shocked by high oil prices
    • First oil price shock: 1973-74
    • Second shock, 1979-1981

Learning Outcomes

Students should be able to do the following after completing Lesson 9:

  • explain the waning influence of the British and Americans in Middle East in the 1960s;
  • illustrate the consequences of the environmental impact of oil use;
  • indicate when “Peak Oil” occurred in the US and the consequences;
  • list the engineering challenges in production and transportation in Alaska and North Sea;
  • explain why Dr. Hammer was boxed in a corner by Libya with no options;
  • explain the constant split in OPEC and why there were the Tripoli & Tehran agreements;
  • explain with respect to ownership: concession, participation, and nationalization;
  • explain why market price went above the posted price and why Nixon abolished quotas;
  • account for why Sadat’s approach to the war was more psychological than military;
  • articulate why King Faisal who had always resisted the oil weapon changed his mind;
  • justify why the war caught both Israel and the US by surprise;
  • explain why OPEC wanted to renegotiate the Tripoli and Tehran agreements;
  • explain why the US oil companies always had to get approval from the Dept. of Justice;
  • rationalize why the US wanted its hand in the war hidden;
  • explain the significance of the unilateral change in the posted price by OPEC in 1973;
  • account for the state of the US government during the war and its impact/consequences;
  • present arguments for and against the many conspiracy theories relating to the war;
  • provide the recipe for panic in the oil industry;
  • state the two components of the embargo and why OPEC cut production and made profit;
  • explain how high oil prices impact economic growth, recession, and inflation;
  • justify the effect of the embargo on the psyche of the US and its citizens;
  • indicate the most visible symbol of the oil embargo and the Club of Rome prediction;
  • explain “equal suffering-equal misery” allocation principle and the function of the IEA.

What is due for Lesson 9?

This lesson will take us one week to complete. Please refer to the Course Syllabus for specific time frames and due dates. Specific directions for the assignment below can be found within this lesson.

Lesson 9 Checklist
Activity Location Submitting Your Work
Read The Prize: Chapters 28, 29, & 30 No Submission
Read The Quest: Chapters 4, 5, & 8 No Submission
Read Online Lesson 9: OPEC and the Hydrocarbon Age No Submission
Complete Lesson 9 Participation Activity Canvas
Take Lesson 9 Quiz Canvas


Each week an announcement is sent out in which you will have the opportunity to contribute questions about the topics you are learning about in this course. You are encouraged to engage in these discussions. The more we talk about these ideas and share our thoughts, the more we can learn from each other.