om oil are used to buy consumer goods or are invested in stocks, government bonds or real estate abroad, OPEC has to (recycle( its money into the hands of its customer countries. Thus, the wealth of OPEC is effectively bound to the health of industrialized nations( markets.
That this economic bind between OPEC and its markets is real is borne out by historical evidence. A ready example is the (Oil Crisis( of the 1970s, when, in the wake of the Israeli-Egyptian war, rising oil prices and the resulting inflation eroded the buying power of OPEC states. 3 Although popularly considered a unilateral action on the part of OPEC, especially the Arab countries, to punish the U.S. for supporting Israel, there is evidence that the Nixon administration, the U.S. National Petroleum Council and the oil industry had favored raising the price of oil for their own reasons. It was understood that in order to develop viable alternative sources of energy, encourage energy conservation and to stimulate new exploration for oil, oil prices would have to rise. 4 On
...