The data concerning world oil prices and global oil consumption as depicted in Figure 8.18 is sourced from the 2021 BP Statistical Review of World Energy. [1]

Google

Figure 8.18 presents a graph that displays two key trends over time: the global price of oil, adjusted to constant 2020 US dollars, from 1865 to 2021, and the worldwide consumption of oil from 1965 to 2021.

World Oil Prices (1865–2021) and Global Oil Consumption (1965–2021) (Figure 8.18)

To cite the ebook, use The CORE Econ Team 2023 The Economy 2.0: Microeconomics Open access e-text https://core-econ.org/the-economy/.

To cite a unit, use The CORE Econ Team 2023 The Economy 2.0: Microeconomics Open access e-text https://core-econ.org/the-economy/ Unit [unit number] (url).

CORE Econ - The Economy 2.0: Microeconomics

Source for Figure 8.18: BP Statistical Review of World Energy (2021)

Between the late 1800s and the early 1970s, global oil prices were notably low and stable. This price stability was driven by a significant increase in supply resulting from technological progress, decreased costs of exploration and extraction, and the expansion of global trade. These factors made oil a more abundant and less expensive commodity to produce and transport.

Factors Leading to Low and Stable Oil Prices (Late 1800s–Early 1970s)

During the 1970s, a sharp increase in oil prices, initiated by the Organization of the Petroleum Exporting Countries (OPEC), severely impacted global economies. Unlike cartels formed by private companies, OPEC is managed by the governments of its member nations, including Saudi Arabia and other major oil producers. [2] Leveraging their high market share of the world's oil resources, these nations collaborated as a cartel, which gave them considerable market power. By jointly restricting their supply, they were able to significantly raise the market price and increase their profits.

Learn Before

Related