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> More than the aftermath of the 1967 Six-Day War? Yes. Those were Egypt and Syria's concern, not OPEC's. > You'd be hard pressed to find the Nixon shock on t
by taylodl 2y ago
> More than the aftermath of the 1967 Six-Day War?
Yes. Those were Egypt and Syria's concern, not OPEC's.
> You'd be hard pressed to find the Nixon shock on the international price of oil
BINGO! That's the problem. The US dollar was tanking due to the Nixon Shock. OPEC was getting paid with ever more worthless pieces of paper.
OPEC already had soured relations with the West due to the Nixon Shock and believed they weren't being compensated fairly for their product, due to how the oil market was structured at that time. The West's support of Israel during the Yom Kippur War simply proved to be too much.
OPEC retaliated to these events with the Oil Embargo, which completely altered the oil market from then on and gave OPEC much greater financial power, and money.
At the end of the day, the Oil Embargo was mostly about money, solving a money crises created by the Nixon Shock. Its resolution resulted in OPEC getting more money.
Let me put it this way, if there had been no Nixon Shock, would the Yom Kippur War in and of itself have caused the Oil Embargo? Probably not. The Oil Embargo wasn't about ideology, it was about money. That's why the always say to follow the money.
- dan-robertson 2y agoReal prices, which account for inflation, do not show the Nixon shock. Maybe you think the nominal prices should be adjusted some other way to show the Nixon shock?
- taylodl 2y agoReal prices account for CPI, not the dollar's fall against international currencies. From our perspective, the Nixon Shock appeared to have little effect. That wasn't true for our trading partners.
- JumpCrisscross 2y ago> Real prices account for CPI, not the dollar's fall against international currencies Real means inflation adjusted. How you deflate is a methodological choice. For a consumer price, you deflate by the appropriate CPI or PCU. For producers, PPI. For international comparisons, either PPP or a trade-weighted basket of currencies. The Nixon shock did not have an effect on real oil prices for OPEC members. It’s comforting to think complex events like the Oil Embargo have singular causes. But switching to Bitcoin won’t stop foreign wars or inflation or any of the things every country on metal standards dealt with for thousands of years.
- taylodl 2y ago> The Nixon shock did not have an effect on real oil prices for OPEC members. That's simply factually incorrect and I'm done arguing over a simple fact. And no, I don't agree to disagree. > It’s comforting to think complex events like the Oil Embargo have singular causes. You are the one who's been arguing the Oil Embargo has a simple cause, namely the Yom Kippur War. I'm the one who's been arguing there were multiple causes, and the Yom Kippur War was simply the straw that broke the camel's back.
- dan-robertson 2y agoWhat method of adjusting oil prices do you propose. What does the graph look like when adjusted with this method?