ucbmunc 2012
Background Guide
Organization of Petroleum Exporting Countries
Updated 12 November 2011
Head Chair:
Vice Chair:
Vice Chair:
Tina Noohi
Laetita Benador
Riyaz Shah
Crisis Director:
Assistant CD:
Assistant CD:
Assistant CD:
Sebastian Delgado
Eva Du
Hayley Golub
Laura Siddi
UC Berkeley Model United Nations San Francisco, California Dear Delegates,
I would like to welcome you to the Organization of Petroleum Exporting Countries. I am
so excited to share a fantastic weekend in San Francisco for UCBMUN 2011. My name is
Tina Noohi and I will be your chair for this riveting conference. I am a fourth year Public
Health major at UC Berkeley, born and raised in San Diego, California. I have been
involved in debate for the past six years and was introduced to Model UN in college.
Needless to say, and if my heritage has anything to do with it, I am ecstatic about the
opportunity to chair OPEC this year.
In and of itself OPEC stands as a large force around the world, but its strength during the
Oil Embargo of 1973 stands unparallel in its history. The Crisis Director, our Assistant
Crisis Director, the Crisis Staff, as well as myself have worked very hard this past year to
bring to you OPEC as it was in the 70’s. I encourage you to make use of the power of this
Cabinet as this Crisis stimulation places history in your hands.
While this stimulation sets us back nearly forty years, I advise you, both in your research
and debate to remember the significance of such an important topic: Oil. While the
current market daily emphasizes the importance of this diminishing resource, the vigor
with which OPEC dominated the oil market in 1973 transformed it into a political force
to be reckoned with. Evaluate your allies, your enemies, and the actions you take because
they may affect the future of your country as well as your relations with this organization.
If you have an questions or concerns regarding the background guide, the committee, the
topic, or the conference in general please contact me and I will do my best to answer your
question or relay you to another UCBMUN 2011 Staff Member who can answer your
question or address your concern. I am looking forward to meeting each of you and
anxious to see how you will shape history.
Best Regards,
Tina Noohi
OPEC Chair
t.noohi@berkeley.edu
Joint Crisis: Organization of Petroleum Exporting Countries UC Berkeley Model United Nations San Francisco, California Topic Summary:
After the turmoil of the Yom Kippur war in October of 1973, the Arab world
retaliated against the U.S. support of Israel. The Organization of Petroleum Exporting
Countries, made up of mostly Persian Gulf nations in the Arab world turned into a
political force. The embargo targeted the West and had large ramifications on the oil
market. OPEC was able to use its control over the oil market to induce high prices on
Western consumers, who were already suffering from high inflation and a staggering
stock market. More than anything the embargo, though it was short lasting, showed the
power that oil had on all aspects of a nations ability to function, sending a clear message
across to the rest of the world that those who held the oil, in many ways, had the potential
of great power.
OPEC Mission Statement:
The Organization of Petroleum Exporting Countries presents the following
Mission Statement along with a twenty-three paged Statute:
The mission of the Organization of the Petroleum Exporting Countries (OPEC) is
to coordinate and unify the petroleum policies of its Member Countries and
ensure the stabilization of oil markets in order to secure an efficient, economic
and regular supply of petroleum to consumers, a steady income to producers and a
fair return on capital for those investing in the petroleum industry.
The Statute can be found on the organizations webpage opec.org. I encourage reading the
manuscript in order to develop full understanding of the organization’s policy.
Joint Crisis: Organization of Petroleum Exporting Countries UC Berkeley Model United Nations San Francisco, California Foundation of OPEC
Founded in 1960 in Baghdad, Iraq, the Organization of Petroleum Exporting
Countries protects the oil markets of its member states. An often over looked fact of its
history is that OPEC was established in response to U.S. action in 1959 to place an
import quota on crude oil. This quota restricted oil of Middle Eastern suppliers in favor of
the Western hemisphere counterparts,
Canada and Mexico (econlib.org). The
depreciating prices of these Persian
Gulf nations were enough to spur a system of protection amongst these countries.
The following September in 1960, five countries met in the capitol of Iraq to form
what would shape into OPEC. Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela were the
original nations. By the time the Oil Embargo of 1973 developed the original five in
addition to Qatar, Indonesia, Libya, United Arab Emirates, Nigeria, Ecuador, Algeria,
and Gabon were all member states (econlib.org). OPEC aims to establish stability and
security for all member states.
1959 U.S. Quota
In an effort to secure Western markets, the U.S. government placed a quota on
foreign oil in 1959. The Mandatory Oil Import Quota program (MOIP) favored oil from
Mexico and Canada. This program largely affected the major oil exporters in the Persian
Gulf because both the crude oil and refined products from these respective nations
became largely restricted. The effects of this quota were seen immediately as Middle
Joint Crisis: Organization of Petroleum Exporting Countries UC Berkeley Model United Nations San Francisco, California Eastern oil quickly depreciated. MOIP was arguable a large contributing factor to the
foundation of OPEC.
1960 Foundation of OPEC in Iraq
As a response to MOIP and in an effort to protect themselves from further upsets
in the oil market, four gulf nations, along with
Venezuela, met in Baghdad, Iraq to establish the
Organization of Petroleum Exporting Countries
in 1960. OPEC sought to stabilize the oil market
by creating unified petro policies between its
member nations. The organization explains its hopes to bring “economic and regular
supply of petroleum to consuming nations; and a fair return on capital to those investing
in the industry” (opec.org).
1967 Six Day War
In early June of 1967 the Six-Day war broke out
between Israel, Egypt, Jordan, and Syria. While the
above countries are the ones considered to be the distinct
players, much of the Arab world demonstrated its
support against Israel. The Arab nations launched a
three-pronged attack on the Jewish State. Israel was able
to defend itself against the larger Egyptian army. While
Joint Crisis: Organization of Petroleum Exporting Countries UC Berkeley Model United Nations San Francisco, California the war eventually reached a cease-fire at Golan Heights on June 10th, there was little to
no peace development in the region. The Arab world reiterated its rejection of Israel.
1968 Foundation of OAPEC
In an effort to further stabilize oil in the Arab world, Kuwait, Libya, and Saudi
Arabia formed the Organization of Arab Petroleum Exporting Countries (OAPEC). These
three countries, referred to as the original three, met in Beirut on January 9th, 1968.
Though not major oil contributors, both Egypt and Syria became a part of this
organization. Through their centralized policies, OAPEC attempted to place pressure on
the West. These actions further emphasized their discontent with Western support of the
Israel. The organization presents the following as its general mission and history:
“Established by an agreement amongst Arab countries which rely on the export of
petroleum, the Organization of Arab
Petroleum Exporting Countries
(OAPEC) is a regional intergovernmental organization concerned
with the development of the petroleum
industry by fostering cooperation
among its members. OAPEC contributes to the effective use of the resources of member
countries through sponsoring joint ventures. The Organization is guided by the belief in
the importance of building an integrated petroleum industry as a cornerstone for future
economic integration amongst Arab countries” (oapec.org).
Joint Crisis: Organization of Petroleum Exporting Countries UC Berkeley Model United Nations San Francisco, California 1973 January U.S. Stock Market decline
Starting in January of 1973 the U.S. Stock Market began declining due mainly to
the energy crisis. As oil prices began to shoot through the roof, the U.S. continued
spending with the Vietnam War, and Arab markets stayed united, fiscal problems
continued to add to the decline. It was becoming all too clear that the US was going to
face financial problems that would extend to every corner of its economy. After problems
with President Nixon, as well as the major changes in Bretton Woods, the U.S. dollar
sharply depreciated and high inflation led to a crash that left the country struggling.
These problems set the stage for a very vulnerable U.S. that was susceptible to any
decision made by big oil controllers.
1973 October 6th Yom Kippur War
On October 6th of 1973 Egyptian and Syrian forces launched an attack on Israel
on the Jewish holy day of Yom Kippur. Other Arab nations, like Iraq, Saudi Arabia, and
Kuwait were involved in helping the Egyptian and Syrian forces. They provided financial
support as well as weapons and manpower. Just when the Arab world was advancing and
chances were slim for the nation of Israel, they managed to muster up attacks in the Sinai
and at Golan Heights. While the UN organized a cease-fire later in October, the real
question for the Arab world was the way in which the Jewish State was able to retaliate,
when they were so demonstratively weak. Israel’s ability to retain defense was due in
majority to U.S. support and involvement in the Yom Kippur War. In addition to
weapons, the U.S. was able to provide intelligence to Israeli forces with images from the
Joint Crisis: Organization of Petroleum Exporting Countries UC Berkeley Model United Nations San Francisco, California SR-71 Blackbird that showed were the Arab troops were concentrated. With this
information in hand, Israel was able to center its attacks and correctly deploy troops.
1973 October 17th OPEC Oil Embargo implemented
OPEC, in retaliation against the west, for re-supplying Israeli militia during the
Yom Kippur War implemented an embargo on October 17th and stopped the production
of crude oil. Almost immediately the price per barrel in the U.S. increased. Previously
thought to be in control of their own oil, Western consumers saw themselves fall prisoner
to the decisions of Arab companies half way around the world. Oil was now functionally
a weapon for the Arab world to show its anger at the West, and in many ways,
demonstrated their power.
Joint Crisis: Organization of Petroleum Exporting Countries UC Berkeley Model United Nations San Francisco, California 1973 US attempts to cope with rising oil prices
In order to cope with the oil prices the Nixon administration implemented systems
of oil rationing. With a growing suburbia in the U.S., majority of workers drove to work.
Nixon asked the nation to help with the crisis by saving on heat and electricity, reducing
work hours, and limiting oil per customer at the gas station. Nixon even went to far as to
extend Daylight Savings to save on energy costs. In addition to these daily adjustments,
the Nixon administration proposed the Trans-Alaskan oil pipeline, which was approved
by Congress in November.
Discussion
More than anything the embargo demonstrated the dependence on oil as a
functioning source of society. It placed the Western world at the mercy of nations, which
possess the natural resource. These experiences have driven Western nations to the
understanding of the importance of being independent. The dependant relationship places
one member in the hands of another. So many resources and capital are invested in
methods of either developing new technologies for energy, or finding more oil, to ensure
that these types of events do not reoccur. Oil can be utilized as a weapon of force in
Joint Crisis: Organization of Petroleum Exporting Countries UC Berkeley Model United Nations San Francisco, California international relations because of the way it has been made a part of each sector of
society. This distinct dependency extends to every corner of the world, each and every
society.
For the purposes of the debate I encourage you to consider this dependency. The
way in which you choose to frame your policies should take into account the sectors that
you will be influencing. With a resource that is so integrated into the industries of the
modern world, you task will be to see how you can most effectively procure the results
desired. OPEC was created in defense of the nations for systems of protection, but this
segment of history shows it taking an offensive stance.
It’s your turn to rewrite history.
Joint Crisis: Organization of Petroleum Exporting Countries UC Berkeley Model United Nations San Francisco, California Timeline of Events
1853—World’s first commercial oil well drilled in Poland
1870—Standard Oil of Ohio founded (Rockefeller)
1879—Standard Oil Company of California founded (Rockefeller)
1882—Standard Oil Company of New Jersey founded (Rockefeller)
1882—Standard Oil of New York founded (Rockefeller)
1901—Gulf Oil founded
1901—Texaco founded
1907—Royal Dutch Shell founded
1908—Anglo-Persian Oil Company founded
1914-1918—First World War
1939-1945—Second World War
1944—Bretton Woods conference
1951—Iran nationalizes its oil industry
1960—OPEC founded
1971—Nixon administration goes off gold standard
1973 —6 October: Syria and Egypt attack Israel, initiating Yom Kippur War
1973 —20 October OPEC boycotts shipments to U.S. (later Western Europe and Japan)
Joint Crisis: Organization of Petroleum Exporting Countries UC Berkeley Model United Nations San Francisco, California Questions to Consider
Please see questions posed in the introduction of the background guide.
Note: I have purposely given a general overview of the historical relationship between
independent oil companies and the 1973 oil embargo. I advise each delegate to
thoroughly research the background of the specific company that he/she is representing.
Doing so will only aid the delegate and further enhance debate.
I additionally encourage delegates to reconsider past events and refrain from emulating
history.
Works Cited
"Educate Yourself - The Arab Oil Embargo of 1973-74." Stock, Trading Stocks, Stock
Trading, Trading Stock, Investments, Stocks, the Stock Market by Buy and Hold.
Web. 14 Aug. 2011.
<http://www.buyandhold.com/bh/en/education/history/2002/arab.html>.
"OAPEC - Establishment." OAPEC - Home. Web. 14 Aug. 2011.
<http://www.oapecorg.org/en/aboutus/establishment.htm>.
OPEC : Home. Web. 14 Aug. 2011. <http://www.opec.org/opec_web/en/index.htm>.
"OPEC: The Concise Encyclopedia of Economics." Library of Economics and Liberty.
Web. 14 Aug. 2011. <http://www.econlib.org/library/Enc/OPEC.html>.
"Players." The Six-Day War. Web. 14 Aug. 2011.
<http://www.sixdaywar.org/players.asp>.
"The Yom Kippur War of 1973." History Learning Site. Web. 14 Aug. 2011.
<http://www.historylearningsite.co.uk/yom_kippur_war_of_1973.htm>.
http://www.oapecorg.org/en/aboutus/establishment.htm
http://www.bettertrades.net/stock-market-crashes/1973-1974-stock-market-crash.asp
http://www.buyandhold.com/bh/en/education/history/2002/arab.html
http://www.envirothonpa.org/documents/The1973OilCrisis.pdf
http://www.opec.org/opec_web/en/index.htm
http://www.econlib.org/library/Enc/OPEC.html
http://cnre.vt.edu/lsg/intro/oil.pdf
http://www.sais-jhu.edu/bin/u/r/R_Oil_and_the_Macroeconomy.pdf
http://www.sixdaywar.org/players.asp
Joint Crisis: Organization of Petroleum Exporting Countries