Escalating Oil Prices And The Global Economy

12 Pages 3006 Words

With the current rise in oil prices, many Americans have asked, “What is happening?” In order to fully understand the current situation and how it is affecting the global economy one must look at a variety of factors including: the history of oil crisis in the United States, causes of the current situation, and possible outcomes for the future. Many people are researching to come up with the best solution for this problem. The escalating price of oil has become more severe and is beginning to reflect oil crisis of the past.
The current crude oil price spike began early in 1999 due to a variety of factors. Struggle in the Middle East along with minimal policy changes from the Organization of Petroleum Exporting Countries and the U.S. Government has kept prices high to this very day. It is very important to understand the history of our Country’s oil situation before looking at the current oil situation. Through the years between 1970 and 2004, the price of oil has risen and fallen in often-drastic amounts. It is these price fluctuations in crude oil that has caused fuel prices to vary and the economy of the United States to be volatile. There have been several changes in oil prices that have occurred in the past twenty four years. These dramatic shifts are helpful to look at because of their impact upon the economy and the oil industry. During this time period there are many major shifts in oil price that can be linked to specific events in world history (Miller, 1998).
First, the Arab oil embargo of 1973 caused a widespread oil crisis and brought crude oil from three dollars a barrel to a staggering twelve dollars a barrel. Second, the 1979 Iranian revolution caused another crisis that brought crude oil prices to an all time high of thirty-six dollars per barrel. The third major shift occurred in 1991 due to the Persian Gulf War (Miller, 199 8). The events of September 11th, the Iraq war and the manhunt for Osama Bin Laden...