Posts Tagged ‘OPEC’

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Fracking lets us ditch Saudi oil to use our own

September 26, 2014

As part of the run-up to Money Jihad’s five-year anniversary, we’re looking back at five important videos from over the past several years about the financing of terrorism.

Last week we looked at money that has been pumped into the Gulf monarchies in oil royalties that they have turned around to use for terror for decades to placate their own Wahhabi domestic religious/political partners.  But what are we going to do about it? Drill our way out. U.S. energy independence from Arab oil, largely driven by technological innovation through hydraulic fracturing, may be the biggest strategic game-changer in the global balance of power since World War II.

From a Fox News interview last year with the Wall Street Journal’s Steve Moore and national security analyst KT McFarland:

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OPEC hostage shared goals of captors

December 20, 2013

Thirty-eight years ago today, Carlos the Jackal and his band of terrorists forced their way into a meeting of OPEC in Vienna, Austria.  The terrorists eventually received millions of dollars from OPEC’s member nations to secure the release of the hostages after a trans-Mediterranean flight to Algeria.

OPEC leader Sheikh Yamani was spared for two reasons:  1) he paid off Carlos the Jackal, and 2) he also believed in armed Palestinian resistance against Israel.  Carlos’s fellow terrorists never understood why Yamani was a target.

From the documentary “Terror’s Advocate”:

After all, Yamani had orchestrated the Arab oil embargo that damaged the West economically, and Yamani would later fund Osama bin Laden and Al Qaeda, according to the Golden Chain document.  So Yamani was really on the same ideological side as Carlos and Arab terrorist groups from the outset.

The other thing is that radical Muslims have always wanted to control the oil in Saudi Arabia.  Although the Saudi royals are Siamese twins with the radical Wahhabi clerics, and impose strict sharia law against their subjects, the government of Saudi Arabia is seen by Islamists as too friendly to the West from a foreign policy standpoint.  Perhaps Carlos regarded Yamani as a representative of the “establishment,”—or perhaps they had worked out a side deal all along.

Today’s jihadists want control of Arabian petroleum to induce oil shocks against the West like Sheikh Yamani himself had done just a couple years before the OPEC hostage-taking.

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Plan would reduce Canada’s need for OPEC oil

September 6, 2013

Canada is considering a proposal to fuel itself by building a pipeline from the oilsands of Alberta to the more heavily populated provinces of eastern Canada.  Although Canada is already a net energy exporter, this pipeline would be a further step in weaning North America off Arab oil and reducing the flow of petrodollars to de facto state sponsors of terrorism.

The rationale for the “Energy East” pipeline comes to us from a marvelous column by Ezra Levant (h/t Blazing Cat Fur) in the Sun:

Freedom oil: Energy East pipeline appealing and has a politically important spinoff

The largest oil refinery in Canada isn’t in Alberta. Neither is it in Ontario or Quebec, the biggest provinces with the most cars.

It’s the Irving Oil refinery in New Brunswick.

Trouble is, that refinery, like most of eastern Canada, buys imported oil, including from OPEC countries. It’s a paradox: Canada produces an enormous amount of oil, but we export the good stuff to the U.S. and import conflict oil for ourselves.

It’s not just that Canadian oil is produced in a more environmentally friendly manner than OPEC oil; we also use the proceeds for peaceful purposes, treat our workers well and respect human rights. It’s like the difference between Canadian diamonds and African blood diamonds.

There’s another difference, too: Canadian oil is cheaper – on any given day, oil from Canada’s oilsands sells at a $10 to $35 discount to world prices, mainly because of a pipeline bottleneck. So Irving Oil is spending literally millions of extra dollars every day on expensive foreign imports. All for a lack of a pipeline connecting Alberta to the East.

Which is why the proposed Energy East pipeline, announced last week by TransCanada Pipelines, is so appealing.

Its main purpose is to ship oil, of course. But politically it has a more important spin-off. At an estimated $12 billion cost, the pipeline is easily the largest infrastructure project in Canada. Construction will employ thousands of workers, mainly in eastern Canada. And the more affordable crude oil it ships will save thousands more jobs at refineries not just in Saint John but along the route in Quebec, where several refineries have recently closed and more are teetering on the brink.

The pipeline will carry a staggering 1.1 million barrels a day, enough to supply the refineries along its route and then some.

And so TransCanada and Irving Oil propose to build a tanker export facility in Saint John. Instead of Saudi tankers bringing shariah oil to Canada, imagine the possibility of Canadian tankers sending freedom oil out.

At the announcement ceremony at the Saint John refinery, rows of workers stood in hard hats for a photo, and behind them and around the site were simple banners reading “Alberta, Always Welcome.”

Nothing to do with economics, nothing to do with jobs. Everything to do with national unity and calling out the unseemly anti-Alberta bigotry that animates so many anti-oilsands extremists.

What a noble, dignified, grand answer to the critics, like the NDP’s Thomas Mulcair, who has called the oilsands an economic “disease.”

New Brunswick knows this pipeline is the most important economic opportunity they will have in a generation; their partisan provincial legislature issued a unanimous statement of support for it.

Alberta wins with a new path for its oil, a path that can’t be blocked by a pro-OPEC U.S. president.

Quebec and New Brunswick refineries win with affordable feedstock. Construction workers win.Canada wins with a deep-water port to export oil to the world.

Who loses? Saudi Arabia, Algeria and Angola, three odious dictatorships that will have to peddle their blood oil somewhere else…

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OPEC weakened thanks to fracking

August 15, 2013

Evidence indicates once again that hydraulic fracturing techniques in the oil and gas industry are helping to turbocharge North American energy production and reduce the thirst for oil from the Middle East and OPEC.  Rather than combating the financing of terrorism by maintaining onerous regulations on banks and intrusive data mining programs on bank customers, the more effective approach in the long run may be unshackling the private sector and encouraging growth in domestic oil and gas markets to reduce dependence on hostile regimes overseas.

FuelFix blog reports:

Demand for OPEC’s crude will slip by 300,000 barrels a day next year to 29.6 million a day next year, or about 2.6 percent less than the 12-member group is pumping now, the organization said in its first set of forecasts for 2014…

Dependence on OPEC’s crude is slipping as the U.S. and Canada unlock unconventional oil supplies from deep underground shale deposits with new drilling techniques. Brent crude futures have slipped 2.7 percent this year, trading at about $108 a barrel on the London-based ICE Futures Europe exchange today, amid signs of slowing growth in China and uneven recovery in the U.S., the world’s biggest oil consumers…

Energy in Depth blog adds:

This great news also comes on the heels of a report by the Energy Information Administration, which found that for the first time in 16 years, American crude oil production surpassed imports at the end of May.  Additionally, the Paris-based International Energy Agency (IEA) revealed in May that a major increase in North American oil production is sending “shock waves” throughout global energy markets, a phenomenon that could lead to North American energy independence by 2035.  As IEA executive director Maria van der Hoeven put it: “North America has set off a supply shock that is sending ripples throughout the world…A real game changer in every way.” IEA predicts that North America will provide 40 percent of new oil supplies by 2018, while the contribution from OPEC will slip to 30 percent. It’s not surprising, then, that one OPEC official has gloomily admitted: “Some member countries are really suffering from U.S. shale oil”…

Indeed.  Saudi mogul Alwaleed bin Talal recently made headlines after writing an open letter to his government warning that fracking has become a threat to the Kingdom.

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OPEC takes backseat to U.S. shale

June 25, 2013

Fracking continues to diminish the influence and domination of global energy markets by the Organization of Petroleum Exporting Countries by increasing American production.  The weakening of OPEC means:  1) a smaller chance of price shocks and supply disruptions, 2) less dependence on hostile Middle Eastern countries, along with a reduced need for political and military entanglement with those countries, and 3) less petrodollars flowing toward terrorism.

This June 4 editorial from the Houston Chronicle explains how technological advances are causing major shifts in the balance of global power:

Move over, OPEC

Things are getting interesting vis a vis OPEC and the U.S. shale industry.

The once-omnipotent oil cartel is taking serious notice of the impact of the shale boom on global oil prices and markets.

As well it should. Increased shale oil production domestically is pushing the U.S. toward potential energy self-sufficiency by 2018, analysts predict. Boosts in shale oil production in this country already are cutting deeply into OPEC’s share of the U.S. oil market.

And that isn’t even to mention the potential impact of shale gas on the oil cartel. It’s turning out that natural gas from shale is the true bonanza wrought by hydraulic fracturing and horizontal drilling, the two technologies that have given this country access to one hundred-plus year supplies of energy almost overnight.

Since 1992, expanded use of natural gas by the nation’s electric utilities has dropped greenhouse gas pollution by 20 percent.

Expansion of the use of environmentally friendly natural gas into this nation’s huge transportation sector is in its toddler stages. The possibilities here are enormous – and threatening if you are a global energy cartel beset by internal disagreements over where to set production levels.

For decades, OPEC enforced a “take no prisoners” position on oil prices that sent the global and U.S. economies on costly roller-coaster rides tied to price and availability of oil.

We wouldn’t go so far as to suggest that the U.S. take a formal position of tit for tat.

We’d simply say that the shale boom offers the country, and perhaps the world, the opportunity of slipping OPEC’s leash while stabilizing the U.S. and other economies.

Common sense tells us we should take it, and leave OPEC to deal with the consequences on its own…

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American security enhanced as OPEC weakens

January 28, 2013

Thanks to increasing U.S. and Canadian energy production, OPEC no longer induces the wild reaction among traders that it once did.  This according to investor Travis Hoium writing for The Motley Fool (with stock quotes omitted) last month:

Is OPEC Still Relevant in Oil Market?

The energy market used to hang on every word from OPEC. A reduction or increase in production could send prices rising or falling in an instant. But, earlier this week, the oil-producing group announced that it would maintain production where it is, and almost no one cared. There weren’t headlines on the evening news or endless analysis on cable television. It was a story that was over almost before it happened.

This begs the question: Is OPEC still relevant in the oil market?

It’s not what it used to be
To say that OPEC doesn’t matter would be silly. In fact, OPEC’s production has grown faster than world production over the past 20 years.

You could make the argument that OPEC’s influence globally has grown and, considering the rise in prices over the past 20 years, the economic influence of OPEC has arguably grown.

The difference in the past few years is who is buying OPEC’s oil and where these trends are headed. The chart below shows that while OPEC oil production has grown slightly over the past five years, the amount of oil produced in the U.S. and Canada has exploded.

http://www.fool.com/investing/general/2012/12/14/is-opec-an-afterthought-2-article-ideas.aspx

This chart may explain why traders don’t react wildly to OPEC’s statements anymore. It isn’t the U.S., Canada, or even Europe who is heavily dependent on OPEC for oil these days. China is a growing customer of OPEC’s oil; roiling the one customer that is growing isn’t something OPEC is likely to do any time soon.

Impact on stocks
The impact of OPEC’s waning importance in North America can be felt on the stock market as well, particularly by shipping stocks like Frontline, Teekay, and Nordic American Tankers. These oil shippers are being affected by a dramatically reduced need for foreign oil in the U.S. and Europe, and they are all bouncing near 52-week lows.

Right now there’s no end in sight to the pressure on these stocks. With oil production up in non-OPEC countries the need for long-haul shippers is in a steep decline.

The trend will continue
The general trend of increased oil production in North America, and waning influence of OPEC here, is likely to continue. Companies like Continental Resources, Whiting Petroleum, and Kodiak Oil & Gas are still expanding production in the Bakken Shale play in North Dakota and Montana, the Saudi Arabia of North America.

As long as oil prices don’t drop dramatically, the expansion of oil drilling and oil sands production will continue. OPEC will have less influence on oil traded in the U.S. and oil prices felt here at home.

Not forgotten, but in a pickle
With OPEC’s place in context, I would say that OPEC isn’t the power it once was… but it could be. If OPEC decided to drastically increase or decrease supply it could again have a major impact on global oil prices. But that’s becoming less and less likely because of economic reasons within OPEC itself.

OPEC countries are reliant on the revenue that oil exports generate — disrupting supply right now could be problematic. Increasing supply could lower prices and put pressure on shale producers, but budget pressures on many of these member countries requires that they maintain a steady profit from oil. It’s not easy to double supply, but the price of oil easily could be cut in half if another 10 million barrels per day hit the market, for example…

Strong analysis.  On the other hand, OPEC will continue finding buyers in Asia and retain its position as a global power.  And rapid growth in Iraqi oil production could shift the dynamics in OPEC’s favor too.

But the best things about the possibly diminishing power of OPEC are a lesser likelihood of price shocks, less dependence on a volatile part of the world, and less money to fund terrorism.

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Energy security: the chokepoint risk factor

January 14, 2013

5 of 7 critical oil transit corridors are in Islamic world

Looking for another reason to support domestic energy production rather than heavily relying on the fragile political and security situation in the Middle East?  Energy independence from Arab oil isn’t just about reducing the flow of petrodollars to jihad—it’s about ensuring our energy needs are met regardless of the latest turmoil, attack, or unrest in the Islamic world.

This map and background from the U.S. Energy Information Administration should be enough to persuade most citizens that depending on stability in these regions of the world is an untenable proposition:

Shipping lanes for oil

World oil chokepoints for maritime transit of oil are a critical part of global energy security. About half of the world’s oil production moves on maritime routes.

Chokepoints are narrow channels along widely used global sea routes, some so narrow that restrictions are placed on the size of the vessel that can navigate through them. They are a critical part of global energy security due to the high volume of oil traded through their narrow straits.

In 2011, total world oil production amounted to approximately 87 million barrels per day (bbl/d), and over one-half was moved by tankers on fixed maritime routes. By volume of oil transit, the Strait of Hormuz, leading out of the Persian Gulf, and the Strait of Malacca, linking the Indian and Pacific Oceans, are two of the world’s most strategic chokepoints.

The international energy market is dependent upon reliable transport. The blockage of a chokepoint, even temporarily, can lead to substantial increases in total energy costs. In addition, chokepoints leave oil tankers vulnerable to theft from pirates, terrorist attacks, and political unrest in the form of wars or hostilities as well as shipping accidents that can lead to disastrous oil spills. The seven straits highlighted in this brief serve as major trade routes for global oil transportation, and disruptions to shipments would affect oil prices and add thousands of miles of transit in an alternative direction, if even available…

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Video: oil dependence

December 26, 2012

Do you want OPEC to keep calling the shots in the 21st Century?  Do you enjoy seeing American presidents literally holding hands with or bowing down to the Saudi king?

Regular readers know that this blog supports expanded domestic oil drilling to help North America decrease its dependence on Middle East oil.  Although Eyal Aronoff of the Fuel Freedom Foundation (@fuelfreedomnow on Twitter) offers a different course of action to deal with the problem of oil financing terrorism, this video as a must-watch:

Aronoff lays out compelling ideas for reduced oil dependence, and Money Jihad has as well.  Wouldn’t it be nice if national political leaders embraced just some of these ideas as part of a genuine “all of the above” approach to energy to reduce our reliance on Saudi sharia oil?

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Energy independence from Arab oil

December 9, 2012

A recent column by Tom Keane points out the tremendous growth in U.S. energy production thanks in large part to American innovation in hydraulic fracturing.  As he indicates, freedom from Middle East oil presents several benefits:

  • Reduced influence of OPEC
  • The risk of supply interruptions decreases
  • Military spending could decrease without jeopardizing security
  • Domestic economic/job growth

The purpose of independence isn’t necessarily about the price at the gas pump—that is a straw man set up by fans of foreign oil dependence and environmental extremism as a reason to halt progress toward energy freedom.

But let Keane tell it:

A new world of American energy independence

The United States is soon to be awash in oil and natural gas, positively brimming with the stuff whose scarcity and unreliability of supply has plagued us since the end of World War II. It is a remarkable, stunning turn of events — largely unforeseen just a few years ago yet now an imminent although still hard-to-believe reality. And the implications of this new reality will be dramatic too — almost all of them positive although not without some risks. Remember when the United States once trembled at the power of OPEC? In a short while, we may be running the thing.

Last month the well-respected International Energy Agency declared, “A new global energy landscape is emerging . . . redrawn by the resurgence in oil and gas production in the United States.” Within eight years, the America is expected to be the planet’s largest producer of oil. By 2030, we’ll be producing more than we need — exporting, not importing. The reason is technology. Techniques such as hydraulic fracturing have been invented and improved so that they can now economically unlock the vast stores of oil and natural gas across the middle of the country. The flyover states may finally start getting some respect.

It’s uncomfortable to admit this, but Sarah Palin had a point: The key to American energy independence is “drill, baby, drill” — or perhaps more correctly, “frack, baby, frack.”

Don’t count on this abundance making for cheaper gasoline, however. Oil is a global commodity, and, unless the United States decided to subsidize its price, it will still sell to the highest bidder. Nevertheless, the fears of supply disruptions and embargoes — remember the gas lines of 1973? — will largely disappear. Should some country decide to block the Strait of Hormuz, it’ll be other nations, not the United States, feeling the pain. (US law currently prohibits us from exporting oil. Even though it likely will be changed, we’ll still make sure our domestic needs are met first before shipping overseas.)

On the other hand, these newfound supplies may get us a cheaper military budget. Why is the United States so deeply involved in the Middle East but not in, say, Africa? Oil. For at least the last 60 years, its constant supply has been a paramount worry: without energy, the economy collapses. But that policy, while necessary, cost us blood, treasure, and integrity. Too often, we sacrificed our ideals to support a local strongman who could keep pipelines safe. And the wars, both far afield as well as attacks on our soil, have been a burden.

What happens when we no longer need Middle East oil? Foreign policy changes. Conflict is reduced, and our goals can, one hopes, become principled — less tarnished by economic exigencies, more focused on human rights.

There will be dramatic changes at home too. The states with oil reserves will see a huge bump in their economies (already shale-rich North Dakota has the lowest unemployment rate in the country). The entire nation’s economy will benefit too. With energy supplies and prices abundant and stable, business will thrive.

There are risks, two of which are obvious. Fracking can contaminate underground water supplies (and uses lots of water to boot). That’s an issue of smart regulation, however. We already take huge risks with offshore drilling — BP oil, for example. Fracking’s potential impact is arguably less risky and also more manageable.

The other has to do with global climate change. The scarcity of oil (“peak oil” — the theory that supplies are about to diminish — is now, at least for this century, largely kaput) had the beneficial effect of driving us toward conservation and cleaner energy. With a glut of petrochemicals, will that push stop, causing greenhouse gas emissions to worsen? Possibly but not necessarily. The natural gas being extracted by fracking is actually cleaner than oil. Then too, every barrel of oil saved by conservation or alternative energy is a barrel sold overseas — meaning there’s an economic incentive for using renewables.

Those risks notwithstanding, our new world of energy should be a cause of great optimism. Many fear our time is over; the Great American Century finished. The renaissance of domestic oil and gas are of such magnitude, though, it may be another Great American Century is about to begin.

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Golden Chain document named Sheikh Yamani

October 17, 2012

Elderly Arab male in suit with dyed hair and goatee

Sheikh Ahmad Turki Zaki Yamani served as Oil Minister of Saudi Arabia (1962-86), OPEC Secretary General (1968-69), and as a former director of Saudi Aramco.  Sheikh Yamani played a central role in the 1973 Arab oil shock.

But the Arab oil embargo wasn’t Sheikh Yamani’s only act of economic aggression against the West.  If you accept the credibility of the Golden Chain document which named the financial sponsors of Osama bin Laden prior to 9/11, then Yamani is also culpable for funding Al Qaeda.

Additional background on both Yamani’s role in the embargo and the eventual discovery of the Golden Chain document comes to us from the website calibratedconfidence.com:

…The 1970s oil embargo is evidence enough that the U.S. economy is vulnerable to attack by politically motivated financial operators. BCCI [Bank of Credit and Commerce International] co-founder Sheikh al-Nahyan of Abu Dhabi initiated the embargo as a way to retaliate against the United States for providing military aid to Israel, which had just fought a coalition of Arab states in a war that broke out in October 1973. As Sheikh al-Nahyan has said, the idea for retaliating against the United States with an embargo came to him in consultations with his BCCI co-founder, Abedi.

The details of the plan were worked out with Sheikh Ahmad Turki Yamani, then the Saudi minister of petroleum; and Sheikh Abdel Hadir Taher, the governor of the Saudi state oil company Petromin. Both of those Sheikhs were also shareholders in BCCI. And the mammoth oil profits that these Sheikhs earned from the embargo were, to a large extent, delivered to BCCI, which opened for business just before the embargo went into effect. It was, in fact, this new oil money that made BCCI a powerhouse in the world of finance and a giant criminal enterprise capable of plundering the U.S. economy throughout the latter half of the 1970s and the 1980s.

Henry Kissinger once said that the oil embargo was “one of the pivotal events in the history of the [twentieth] century.” Kissinger was not referring to BCCI, but the emergence of BCCI as destructive criminal element was certainly an important outcome. And it is not out of the question that some of the acts that BCCI subsequently perpetrated against the United States were, like the oil embargo, motivated to some extent by ideology and the by the resentment that the sheikhs felt as a result of the 1973 Arab war with Israel. After all, a principal tenet of both Salafi Islam (the brand of Islam subscribed to by the sheikhs behind both BCCI and the oil embargo) and radical Shiite Islam (subscribed to by a number of BCCI’s key executives) is that Muslims should fight their enemies by “plundering their money.”

Regardless of what the motives of BCCI’s founders were in the past, it is clear that most of them are, to this day, major players in the global financial system. They have more than enough firepower to inflict damage on the U.S. markets. And, as the French intelligence report noted, “directors and cadres of the bank [BCCI] and its affiliates, arms merchants, oil merchants, Saudi investors” have been among the most important financial supporters of America’s Enemy Number One – Al Qaeda.

By way of introducing just a few of the billionaire BCCI figures who support Al Qaeda, I need to relate a story about Benevolence International, the Al Qaeda front that was accused by the U.S. government of having contacts with people trying to obtain nuclear weapons for Osama bin Laden.

* * * * * * * *

In 2002, U.S. soldiers stationed in Sarajevo raided the local offices of Benevolence International and found a document that referred to the “Golden Chain” – an elite club of twenty Saudi billionaires whom Osama bin Laden had identified as his most important financiers. These financiers not only delivered large sums of money to the prospective nuclear weapons proliferators at Benevolence International, but can correctly be understood to have been among Al Qaeda’s founding fathers.

Some highly regarded authors, such as Steve Coll, who is otherwise quite reliable (though arguably a bit over-reliant on his Saudi sources), have suggested that the Golden Chain members funded Al Qaeda only in its early years. This is false. Most of them continued to support Al Qaeda after bin Laden declared war against the United States and after Al Qaeda carried out the 9-11 attacks.

The Golden Chain document has, meanwhile, received virtually no attention from the media, perhaps because it would seem a bit “crazy” to suggest that Al Qaeda is a movement whose most important operatives are not rag-tag fringe fanatics living in caves, but rather the crème de la crème of Saudi society – the people who control much of the world’s oil wealth, the people who own the most powerful manufacturing conglomerates, and the biggest Saudi banks, and the biggest hedge funds, and the biggest stock brokerages, and the Saudi stock exchange itself.

One of the names on the Golden Chain list?  Sheikh Yamani himself.  Yamani struck at us once through the Arab oil embargo.  Is it so hard to believe that he would have attempted an encore performance by funding Osama bin Laden?

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Blistered by the Arab oil embargo

October 16, 2012
Price controls caused run on service stations

Gas station line during the Arab oil embargo

Thirty-nine years ago today, OPEC announced the price hikes that would result in the oil crisis of 1973.  U.S. attempts to limit the price of gasoline resulted in supply shortages and long lines at American gas stations.  The instigators of the Arab oil embargo were rewarded for their mischief-making by obtaining concessions on Israeli troop withdrawals negotiated by the U.S.

Here’s the official history from the State Department:

The OPEC Oil Embargo, which lasted from October 1973 to March 1974, posed a major threat to the U.S. economy. Moreover, the Nixon Administration’s efforts to address the effects of the embargo ultimately presented the United States with many foreign policy challenges.

During the October 1973 Arab-Israeli War, the Arab members of the Organization of Petroleum Exporting Countries (OPEC) announced an embargo against the United States in response to the U.S. decision to re-supply the Israeli military during the war. OPEC members also extended the embargo to other countries that supported Israel. The embargo both banned petroleum exports to the targeted nations and introduced cuts in oil production. Several years of negotiations between oil producing nations and oil companies had already destabilized a decades-old system of oil pricing, and thus the OPEC embargo was particularly effective.

Implementation of the embargo, and the changing nature of oil contracts, set off an upward spiral in oil prices that had global implications. The price of oil per barrel doubled, then quadrupled, leading to increased costs for consumers world-wide and to the potential for budgetary collapse in less stable economies. Since the embargo coincided with a devaluation of the dollar, a global recession appeared imminent. U.S. allies in Europe and Japan had stockpiled oil supplies and thus had a short term cushion, but the longer term possibility of high oil prices and recession created a strong rift within the Atlantic alliance. European nations and Japan sought to disassociate themselves from the U.S. Middle East policy. The United States, which faced growing oil consumption and dwindling domestic reserves and was more reliant on imported oil than ever before, had to negotiate an end to the embargo from a weaker international position. To complicate the situation, OPEC had linked an end to the embargo to successful U.S. efforts to create peace in the Middle East.

To address these developments the United States announced Project Independence to promote domestic energy independence. It also engaged in intensive diplomatic efforts among its allies, promoting a consumers’ union that would provide strategic depth and a consumers’ cartel to control oil pricing. Both of these efforts were only partially successful.

The Nixon Administration also began a parallel set of negotiations with OPEC members to end the embargo, and with Egypt, Syria, and Israel to arrange an Israeli pull back from the Sinai and the Golan Heights. By January 18, 1974 Secretary of State Henry Kissinger had negotiated an Israeli troop withdrawal from parts of the Sinai. The promise of a negotiated settlement between Israel and Syria was sufficient to convince OPEC members to lift the embargo in March 1974. By May, Israel agreed to withdraw from the Golan Heights.

Rather than supporting energy independence that would prevent American foreign policy from being held hostage by the Arab world again, Democrats and environmentalists have continued limiting energy production at every turn over the years by prohibiting ANWAR drilling, blocking the Keystone XL pipeline, imposing a moratorium on Gulf of Mexico drilling, pushing for heavy taxes on oil companies and gasoline, keeping excessively long permitting processes for building new oil refineries or authorizing hydraulic fracturing, and by fabricating doomsday scenarios about peak oil.