Levy, Walter J.
July 1974
Foreign Affairs;Jul1974, Vol. 52 Issue 4, p690
The world faces frightening repercussions as a result of the sudden inflation of oil prices and the assumption of almost total control by the producing countries. The international oil companies have become in effect contractors providing technical services, with no leverage in the producing countries and coming under fire at home. Yet they can no longer ensure ready access and steady supply, which points to greater involvement of consuming governments in oil industry operations. Some way will have to be found of financing even reduced levels of oil supplies, and in the less developed countries the problem will be acute. The world economy cannot survive if cartel pricing and supply restraints are to continue. The first step is for consuming countries to cooperate as closely as the OPEC countries. The search for alternative sources of energy must be carried on in a coordinated way to avoid duplication and waste, and no importing country should work for unilateral advantages, which are likely to be in the end self‐defeating. An effort must also be made to understand the case of the producers, who see the necessity of cushioning themselves now against the time when oil runs out and who see higher prices now as an incentive for development of alternatives, as well as compensation for too low a level of prices in the past. It must be recognized, however, that these nations are for the most part fragile entities whose interests cannot possibly lie in crippling the western world. The fact remains, though, that no alternatives to oil are yet apparent, and efforts to conserve are negligible. A genuine austerity program among importing nations, particularly the more wasteful, like the U.S., must be adopted ‐ or it will simply be forced upon them. Oil, like food, is a global issue, and a solution must be found if disaster is to be avoided.


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