How OPEC's high prices strangle world growth

Journal Article · Mon Dec 20 00:00:00 EST 1976 · Bus. Week; (United States)

OSTI ID:7253374

The high energy costs brought on by price increases of the Organization of Petroleum Exporting Countries (OPEC) has reversed the trend of economic growth through cheap energy. Many economists feel that U.S. acceptance of these prices has supported the cartel. As a result, the world economy will lower, inflation and unemployment will intensify, and rescheduling the developing countries's $170 billion external debt will disrupt international finance. The increase of crude oil prices from $2.75 to $12 a barrel have caused the consuming nations to lose $600 billion in output while paying OPEC an additional $225 billion in new oil revenues. The U.S. lost $60 billion in GNP and over 2 million jobs in 1976 alone, according to George Perry of the Brookings Institution; capital investment has dropped and some has been diverted to the weapons industry. An overall tightening of the U.S. economy, which some economists think was too restrictive, has been the major U.S. response. Although world capital seems to be adjusting to the higher prices, some economists are concerned that the international financial structure cannot withstand present balance-of-payment deficits of $40 to $60 billion. Only large loans by OPEC will enable the developing countries to continue economic growth. The political impact of OPEC prices is resulting in a movement toward socialism and fascism in the developed countries and conservatism in the oil-producing countries. The Soviet Union has supported the price increases and the movement to the left. (DCK)

• OSTI ID: 7253374
• Journal Information: Bus. Week; (United States), Journal Name: Bus. Week; (United States)
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING
POLICY AND ECONOMY
02 PETROLEUM
OIL-IMPORTING COUNTRIES
ECONOMIC POLICY
OPEC
PETROLEUM
CHARGES
TRADE
CAPITAL
COST
DEVELOPING COUNTRIES
ECONOMICS
ENERGY SUPPLIES
FINANCING
GOVERNMENT POLICIES
GROSS NATIONAL PRODUCT
INTERNATIONAL COOPERATION
MARKET
ENERGY SOURCES
FOSSIL FUELS
FUELS
INTERNATIONAL ORGANIZATIONS
294002* - Energy Planning & Policy- Petroleum
290200 - Energy Planning & Policy- Economics & Sociology
020700 - Petroleum- Economics
Industrial
& Business Aspects
021000 - Petroleum- Legislation & Regulations