TAILIEUCHUNG - Lecture Issues in economics today - Chapter 39: Energy prices

When you finish this chapter, you should: Define a cartel, model how a cartel can make their members large sums of money, show why cartels are not typically stable and describe the conditions necessary for creating cartel stability, evaluate whether OPEC qualifies as a cartel, summarize the history of inflation-adjusted oil and gasoline prices. | Chapter 39 Energy Prices McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter Outline HISTORICAL VIEW OPEC WHY PRICES CHANGE SO FAST WHAT WILL THE FUTURE HOLD Electricity Prices Historical Events Relating to Oil and Gas Prices 1972 Arab-Israeli War US support for Israel prompted an embargo by Arab oil producers against the US and Europe. This led to a significant increase in crude oil prices. 1979 Iranian Revolution Iran’s Islamic revolution led to instability in the Persian Gulf. This led to a significant increase in crude oil prices. 1980’s Rapid increases in profits led to significant discoveries of oil in Mexico and the North Sea 1980-1988 Iran-Iraq War The war led to increased production by both parties as each needed to fund their war effort. This caused a precipitous fall in crude oil prices. World Oil Reserves Group Billions of Barrels in Reserve Percentage of World Reserves Persian Gulf 664 63% Non-Persian Gulf OPEC 134 13% Rest of the World

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• Issues in economics today
• Lecture Issues in economics today
• Macroeconomic issues
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• Price control issues
• Energy prices
• Economics of crime
• Economics of children
• Opportunity cost
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• Demand model
• Elasticity of demand
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