1973 Arab Oil Embargo
The OPEC oil embargo quadrupled the price of oil in six months. Prices remained high even after the embargo ended. OPEC saw the Yom Kippur War as a way to make its geopolitical power known and to strike a blow at the US oil giants. The embargo caused the United States and Western European countries to reassess their dependence upon Middle Eastern oil and led to far-reaching changes in domestic energy policy, including increased domestic oil production in the United States and a greater emphasis on improving energy efficiency. In his book, ‘Confessions of an Economic Hitman‘, John Perkins mentioned the aftereffects of the embargo:The embargo also resulted in significant attitude and policy changes. There seemed little doubt that the 1973 oil embargo – which had initially appeared to be so negative – would end up offering many unexpected gifts to the engineering and construction business, and would help to further pave the road to a global empire. They agreed to use US dollars for oil contracts.
Bretton Woods International Monetary System
At the same time as the Arab oil embargo, the world economy was in recession, and the Bretton Woods international monetary system was formally ended in 1973.The Bretton Woods international monetary system was established by delegates from 44 nations in July 1944 at the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire. It established a system of fixed currency exchange rate using gold as the universal standard. Backing currency by the gold standard started to become a serious problem throughout the late 1960s. By 1971, the issue was so bad that US President Richard Nixon gave notification that the ability to convert the dollar to gold was being suspended “temporarily.” The move was inevitably the final straw for the system and the agreement that outlined it. There were several attempts by representatives, financial leaders, and governmental bodies to revive the system and keep the currency exchange rate fixed.
1973 Bilderberg Meeting
They came from thirteen Western European countries, the United States, Canada and various international organisations. Among the participants were Gerrit Wagner, the CEO of Shell, and of the other oil majors: British Petroleum (BP), Total S.A., ENI, Exxon.
The Papers
Paper 1’s author described why there was a fresh impetus for the European Community (“EC”) to have an energy policy: “The European Community, heavily dependent on the outside world for its energy supplies … The Commission’s main present concern – as its latest proposals showed – was the question of supplies.” The author then discussed suggestions to overcome energy supply problems and the mapping out of an energy policy. The final section of his paper discussed the need for cooperation between the EC, USA and Japan:Chief among [the reasons for cooperation] was the fact that the [European] Community, the US and Japan were all dependent, at least in the medium term, on other countries for their energy supplies, with all the economic, political and security problems that this implied. [ The cost of these oil imports would rise tremendously, with difficult implications for the balance of payments of consuming countries. It could not be limited to the Atlantic nations, but had to include Japan, the Free World’s second strongest economic power and one of its largest oil importers. Bilderberg Meetings, Saltsjobaden Conference 11-13 May 1973. 24The author described the changes in power structure which included the rise of the Organisation of the Petroleum Exporting Countries (“OPEC”) between 1960 and 1972 and the decline of the relative power of the US.
The Discussion
Nature And Scale of The Energy Problem
According to the author of the American working paper, the “energy problem” was compounded of four principal issues: the continued requests for price increases from Middle East producing countries; the threat to the availability of supplies; the use of oil for political purposes; and, the attack against the oil companies’ ownership position.“1. The continued requests for price increases from Middle East producing countries, accelerated by the devaluation of the dollar. The international oil companies might wage a rear-guard action, but in the end they would yield rather than risk interruption of supplies. They believed it was up to the economies of the consuming countries to absorb these price increases.” [pg. That country was responsible for one-sixth of Europe’s oil supplies, so that one’s access to a daily hot bath depended very much on the attitude of Colonel Qadhafi, as the British speaker put it.” [pg.36]“With reference to the question raised by a French participant about the possibility of important new oil discoveries, the American speaker conceded that there were indeed vast reserves of hydrocarbons, but they were clearly finite. Although many parts of the world had not been actively explored, geologists had a pretty good idea of what could be found.
What Can Be Done About the Supply Situation?
“It was generally agreed that we would be dependent on Middle East oil for at least the next decade.” [pg. 37]“According to an American participant, any analysis had to begin with a recognition of the predominant role to be played by Saudi Arabia … The security and prosperity of all of our countries thus depended “on how King Feisal feels”, in the words of another US speaker.” [pg. The one issue which appeared to unite them was the conflict with Israel, which posed serious political questions for the US and others in the bargaining for oil.” [pg. The Soviet objective was a prolonged stalemate, which would intensify the process of Arab radicalisation, stimulate stronger feelings of anti-Westernism, and in turn provoke Western animus toward the Arabs. 39]“The impact of a possible change in Soviet policy on the question of the Middle East oil supply was discussed by an American participant. On the other hand, the more dependent the Soviets became on economic dealings with the West, the less satisfaction they would derive from the prospect of uncertain Western oil supplies.
Negotiations With the Producing Countries
A British speaker said that “the producing countries had two ways of applying pressure: first, by singling out a particular country with whom they happened to be displeased at the moment (e.g., the US over its Israel policy); and second, by picking off one or more of the international oil companies, from whom they thought they could extract higher prices. Defending this double front was not easy. Formal international agreements would probably take years, not months, to work out … To solve the immediate, short-term problem, the speaker proposed the urgent establishment of an interim ‘action committee’ to formulate a joint answer ‘to attempts by producing countries to turn the heat on’.” [pg. 42]“A British participant wondered whether a sovereign-to-sovereign confrontation was necessarily the best answer … General Gowan had already said privately, for example, that if Britain should adopt a Rhodesian solution which he could not support as an ardent African nationalist, he would be quite prepared to ‘punish’ her by a temporary boycott of Nigerian oil shipments.” [pg. 43]“According to another British speaker, during the next 10 to 15 years the problem would be not so much the physical availability of oil in the world as the fact that supplies were concentrated in the hands of countries which were exploiting the situation for purely economic reasons.”
Transforming “Our” Relations with the Arab States
“Several speakers expressed the view that negotiations with the producing countries would be more fruitful if their context were broadened beyond the confines of the oil supply question.” [pg. 44]A Netherlands participant said “it was [ ] foolish to advocate political or military interventions. 45]“An Italian participant said that errors in economic and political forecasting had brought us to our present position of absolute dependence on the Middle Eastern countries for our oil supplies. Their requested price increases were simply a reflection of the law of supply and demand which we had always espoused. 45]“A Netherlands participant thought that our relations with the Arabs would be much improved if we were to meet with them more regularly, and not just in the urgency of a crisis, when conflicting emotions were bound to be dominant … He suggested therefore that it might be useful to form an unofficial “working committee”, composed of delegates from the producing countries, the oil companies, the OECD and public representatives.”
Sharing the Available Supplies
“A US speaker said that the struggle for shares of available oil supplies would impose unprecedented strains on the world. If it became an issue between the US and Europe, ‘it would be the greatest single threat to the solidarity of the Atlantic community that we’ve ever seen’.” [pg. This job had to be done by the governments, who therefore ought to reconstitute and modernise the old OECD emergency plan as soon as possible.” [pg. 46]A Netherlands speaker remarked that “to permit the necessary cooperation by the oil companies, there would have to be a specific, formal relaxation of the US anti-trust laws.” [pg. 47]“A general description of the activities of the OECD in the energy field was provided by an International participant … The speaker was confident that appropriate ways would be found within the OECD to associate the efforts of governments and the petroleum companies in meeting their responsibilities in this field.”
Alternative Sources and Forms of Energy
“A French participant wondered if cooperative development of the Soviet Union’s oil and gas reserves would not serve the double purpose of reducing our dependence on the Middle East and improving East-West relations.” [pg. In essence, the Russians were hampered in developing their Siberian resources by both technological and budgetary constraints. During a subsequent eight-year period, the Russians would reimburse the US development loan, after which there was a vague commitment by the US to continue to buy gas in return for the Soviet’s earmarking those revenues to purchase American goods. For too long, Europe and America had consumed cheap fuel without setting aside financial reserves for its replacement or substitution. 51]“Although he thought it unlikely that the Arabs would not increase their oil production during the next several years, an American participant said that ‘something other than hydrocarbons is absolutely essential for the longer run’.” [pg. 51]A Canadian speaker said that “nuclear energy offered the best early opportunity to replace petroleum for the static generation of energy, i.e., for non-transportation uses.”
“A German participant asked whether the energy forecasts on which the discussion had been based were necessarily inexorable. With so many Western countries approaching zero population growth, would consumption indeed continue to grow as predicted? Although this policy had admittedly been discriminatory, it had perhaps been right; otherwise the demand for oil products today would be even greater.” [pg. They were “talking sensible, businesslike language”· in requesting a stable system which would enable them to invest their oil revenues … These remarks were seconded by an Italian speaker, who added that early reform of the monetary system was essential to solve the liquidity problem and to encourage the OPEC countries to make longer-term investments.” [pg. 64]“A British participant said that our work in reforming the international monetary system should not be dominated by the oil issue. If the Euro-markets had been subject to regulation in the way that national banking systems were, things would not have gotten out of hand as they had done.
https://expose-news.com/2023/09/05/bilderberg-group-orchestrated-the-1973-oil-crisis/
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