underlined.
In the years since 1979, however, the apparent transformation of the 1970s has largely faded. World oil prices plunged in the early 1980s, and stayed low until the last few years, when they gradually recovered. OPEC has survived, but without the level of influence or unity it enjoyed in the 1970s. The economic transformation in the Arab world has largely stalled, with oil income failing to bring the level of progress once hoped for. The United States became more dominant in the 1990s than it was before 1973. Even the fear of a new energy crisis seems to have evaporated, almost in a matter of weeks.
We are therefore led to ask what exactly really happened in 1973, and why? What effects did the Arab oil embargo of 1973-74 have, and why did it not have the effects so many people in both the Arab world and the West expected at the time? This project is intended to briefly examine these questions.
A. Domination by the "Seven Sisters" Oil Companies
By the middle of the last century, the world's oil production and distribution were overwhelmingly concentrated in the hands of a half dozen or so major international oil companies. These were traditionally known as the Seven Sisters, though not always seven in number (Brossard, 1983, pp. 17, 131). Under their domination, the world oil market was an oligopoly (Al-Otaiba, 1975, pp. 11ff). On the one hand, the industry was concentrated enough that its members were not subject to the strict price discipline of an open market, but had some freedom to "administer" prices. Even without overt collusion, the oil majors would quickly learn of one another's pricing decisions and could respond according. Moreover, all knew that an attempt by any one of them to undercut prices would gain only a transient advantage in market share before the others responded. Thus they were able to avoid lowering crude oil prices to a level just above production and shipping costs, i.e., ...