posted on Jan, 19 2011 @ 07:04 AM
OPEC sets the import price of oil per barrel. That price is then internationally recognized by the stock exchange and the value of oil is adjusted
American and British oil companies are then allowed to charge the exact same amount per barrel, no matter where the oil comes from. And this is where
the hurt to your bank account comes in. Our domestic oil companies do not have to charge the same amount as the OPEC nations. But they do because they
can and it has made them billions of dollars.
In 1973, the OPEC nations learned that they could use oil as an economic weapon. Because the US had backed Israel during the Yom Kippur war, the OPEC
nations placed an oil embargo on the US and reduced physical oil production until 1974.
At the beginning of the oil embargo, OPEC decided to raise the price of oil by 70% to $5.11/barrel. Not a lot by today's standards, but still a
pretty hefty increase at the time.
Now fast forward to today. Because President Bush led an invasion of Iraq and Afghanistan, OPEC again raised oil prices. They had been steadily
increasing since 1973 but are now at almost $100/barrel. The real reason is the physical production of oil. If they don't pump it and refine it, we
can't buy it.
In 1981, Saudi Arabia attempted to take control of the market. They dramatically increased their oil production and sold it to the US for an insanely
lower price than the other OPEC nations were offering. They singlehandedly caused a price drop from $80/barrel to $38/barrel. But these days, they are
a part of the United Arab Emirates which are a part of OPEC. And they have raked in trillions of dollars since then. Hell, just look at Dubai. That is
what your trip to the gas station pays for.
So how do we fix the current situation? Increase domestic production and lower the price. But our domestic oil companies aren't going to do that. We
are a very greedy nation and that would be bad for business.