Oil and Gas Prices

Oil and Gas Prices
Steven Donaldson
COM 150
December 18, 2011
Lacey Thompson

Oil has been used for over four thousand years with the use of asphalt in Babylon for construction.   In more modern times, theĀ internal combustion engineĀ has brought many new uses of oil.   Oil is both bought and sold in many countries around the world, many countries consuming more than they produce.   As the years went by, organizations such as OPEC, Organization of Petroleum Exporting Countries, were formed and have controlled the price of oil.   When a drop in oil production starts to affect the ability to supply the demand, such as when Iraq invaded Iran, the prices of oil will rise.   Because of   the changes in demand for oil and conflicts in oil producing countries, oil prices have risen over the years.
Oil prices continue to rise because of the slightest change in demand and conflict in countries which produce the World's oil.   In 1970 a barrel of crude oil was $2 and hit a record high of over $140 a barrel in 2008.   As of today the average price of a barrel of crude oil is $96 to $106, this price is affected with the slightest change in demand.   In 1972 crude oil was $3.50 a barrel and by the end of 1974 it had gone up to $12 a barrel.   The cause of this sudden change is the Yom Kippur War, which began on October 5, 1973 when Egypt and Syria attacked Israel, and the United States and many other western countries supported Israel.   This support caused several Arab countries that exported oil to impose an embargo on counties supporting Israel.
"Any doubt that the ability to influence and in some cases control crude oil prices had passed from the United States to OPEC was removed as a consequence of the Oil Embargo" (Williams, 1996-2011).
With the oil embargo of late 1973 over oil prices were steady at around $14 a barrel.   The revolution in Iran between 1978-1979, followed by the invasion of Iran by Iraq, caused a production loss and a price spike of oil.   The revolution...