While most Americans believe the increase in oil prices was due to the Arab oil embargo, few are aware that their elected representatives collaborated with the Organization of Petroleum Exporting Countries (OPEC) and Persian oil producing nations to deliberately inflate the price of oil. The motives behind this costly (to American consumers) collaboration. were revealed by author/researcher Vivian H. Oppenheim in a 1976 article in Foreign Policy. As early as 1971, the U.S. State Department established oil policy priorities during international negotiations, emphasizing the “stability, orderliness, and durability” of supply with no intention of maintaining price limits. Only two years later, the Arab oil embargo disrupted both the cost and continuity of foreign oil. While the gasoline prices were skyrocketing and supplies diminishing at the consumer level, the White House Council on International Economic Policy was reporting economic benefits that the increases were generating in the United States.. OPEC surplus revenue started recycling back into the American economy; foreign oil-producers began investing in American enterprises — corporate stocks, real property, and advanced weaponry. Foreign increases in oil prices meant more money for domestic oil-producers as well. Competition with OPEC encouraged domestic production which subsequently spurred increases in domestic oil prices and profits. While the increases contributed to a world-wide recession, U.S. industries, as the government had speculated, suffered less than their competitors in Europe and Japan. The extent of the pay-off due to the collaboration was revealed by Jack Anderson in 1977. According to a secret Central Intelligence Agency survey of the flood of petrodollars into the United States, the oil-producing countries have invested an astounding $34 billion in U.S. holdings over the past three years. Specifically benefiting from this flow is America’s bankers. The OPEC nations have entrusted their portfolios to the nation’s largest banks, particularly Chase Manhattan, Morgan Guaranty, Bank of America, and New York’s First National City Bank. Since, to this day, most Americans are unaware of their own government’s prime role in raising oil prices, this story qualifies for consideration as on of the “best censored” stories of 1976.
SOURCE: Foreign Policy, Winter Quarter, 1976, “Why Oil Prices Go Up — The Past: We Pushed Them,” by Vivian H. Oppenheim.
“The flood of Arab money into the U.S.” by Jack Anderson and Les Whitten, Santa Rosa Press Democrat, March 25, 1977.