The Organization of the Petroleum Exporting Countries (OPEC) was formed in the 1960s to coordinate production in the world's major oil-producing nations (including Middle Eastern, Sub-Saharan, and South American nations). In 1973, OPEC caused the price of oil to rise sharply (by cutting back on production), partly in response to the 1973 Arab-Israeli War (in which the United States and other Western nations supported the Israelis). Price increases continued throughout the decade, particularly in 1979, when Iran's oil production dropped as a result of the Iranian Revolution.1,3
The soaring cost of oil placed a major strain on all oil-importing nations, causing them to suffer stagflation (simultaneously high inflation and unemployment) in the late 1970s. Since the 1980s, however, oil prices have remained relatively low. Reasons for this include energy conservation efforts, alternative energy development (e.g. nuclear, coal), and expansion of oil production in non-OPEC nations.1,2,3
2 - "World Energy Supply", Encarta 2004. Accessed May 2010.
3 - "Asia", Encarta 2004. Accessed May 2010.