Petroleum has proven to be the most versatile fuel source ever discovered, situated at the core of the modern industrial economy. It is the most widely used source of energy, constituting 45 percent of all energy use in the last five years. Despite competition from gas and nuclear energy, it has maintained its prominence largely because it is the only energy source that can be used across the board--in space heating, as an industrial fuel supply and as a means to generate electricity--and because it continues to be unrivaled in the transportation sector. Petroleum remains abundant, inexpensive and more readily and cheaply transported across long distances than any of its competitors.
For much of this century, the United States was the major oil -producing country, and its government worked hard to prevent oversupply by limiting output and setting prices. When new upstream oil provinces were opened around the world, especially in the Middle East, their governments conspired together in 1960 to create the Organization of Petroleum Exporting Countries (OPEC). Initially, OPEC's main goal was to shift the burden of adjustment onto multinational companies and their home governments, especially the United States (Edward L. Morse, 1995).
The conventional wisdom that OPEC's actions in the 1970s were simply the result of antagonism toward Israel and a desire to redistribute the wealth of the First World cannot explain the "old" political economy of oil. Three factors have been largely ignored in studies of oil history: the role of domestic politics in setting international agendas; the importance of interdependence among economies; and--most importantly--the role of the United States in the world political economy.
The sheer weight of the American economy--along with the ability of the United States to use military force abroad--meant that others had to take the........
