Bruce Hall writes:
…the oil “shortage” crises in the U.S. was pretty much a political phenomenon of the West supporting Israel during the 1967 war (which party was in power then?) and being boycotted by the Arab countries.
For the love of …, in this age of the internet, can’t people spend a 10 seconds to google things? The State Department historian notes:
Oil Embargo, 1973–1974
During the 1973 Arab-Israeli War, Arab members of the Organization of Petroleum Exporting Countries (OPEC) imposed an embargo against the United States in retaliation for the U.S. decision to re-supply the Israeli military and to gain leverage in the post-war peace negotiations.
Here is the price of oil (West Texas Intermediate) in blue and percent change in red.
And the president during the Yom Kippur War was… Richard M. Nixon.
@ Menzie
Menzie, have I EVER dared (much less thought) to tell you you missed the point on this blog??? Have I ever ever ever dared to tell you you missed the point??? Wait for it…….. wait for it………. wait for it………
Menzie you missed the point.
The over-arching lesson here: The problem for the Bruce Halls of the world (never mind the Barkley Rossers who link to research papers that disprove their own points) is NOT googling. The problem for the Bruce Halls of the world, my very cerebral friend, is READING.
Earlier I asked Bruce Hall what he was talking about when he seemed to confuse the Six Day and Yom Kippur wars, but JDH hasn’t posted it yet. I wonder if Bruce Hall voted for Tricky Dick. Maybe even a repeat offender…1968 and 1972. Did he know that Nixon gave us wage & price controls, Nixonomics Phase I and Nixonomics Phase II?
@2slugbaits
I used to tweet a couple local journalists that I had a great deal of respect for (one of them ended up nominated for a Pulitzer and is now an editor at WaPo) maybe around very late 2015 and clear up basically to probably early ’17. Probably more like pester them. And they said certain things, and I remember telling them “Trump is not going to be as bad as Nixon, Trump is just dumb, he’s just basically a dumb-ass, he’s not going to be a Richard Nixon, he may end up in that top 5 worst group, but he won’t be as bad as Nixon”. And now we see, Trump is as bad as, and probably worse than Nixon. Now, I could make a good argument that that is partly a product of the times—like if we took ’73–’74 Nixon, and magically put him into 2015–2018 times what would we have?? You could make a pretty solid argument the “magically created” ’15–’18 Nixon would be much more dangerous than ’73–’74 Nixon, and “magically fast-forwarded” ’15–’18 Nixon would be more dangerous than Trump. I happen to think that Nixon would be more dangerous—but that is very debatable. I could see arguing either side of that one.
Bottom line: I was wrong, Trump is worse than ’73–’74 Nixon. I could make a strong case that economically Reagan was the worst for America of ALL the American Presidents. But as far as the “Who embodies ‘pure evil’??” thing, it’s a very tight race between Nixon and Trump.
Moses,
You are beginning to look like one of those climate change skeptics who when confronted with a paper that shows global average temperature is rising attempts to redefine the science as in “Oh, atmospheric pressure is really the measure of temperature, and it is ot rising.” If Native Indian ancestry is evenly distributed across Euro-Americans as you claim is someow shown by Byrc et al, even though the paper clearly shows massive variations across states in the percentages of Euro-Ameircans with such ancestry. You really need to cut out the crackpottery.
@ Barkley Junior
My advice to you, if you don’t believe Native American ancestry is uniformly distributed across the European American population, then don’t quote from papers that say that that is indeed the case:
“The inferred segments of African and Native American are UNIFORMLY DISTRIBUTED across the genome. Although we expect that some of the inferred ancestry might arise from difficulties in assigning ancestry in complex regions of the genome, only a small fraction of the estimated African and Native American ancestry in European Americans can be explained through such biases and is not expected to give rise to any substantial (more than 1%) ancestry from any population.”
That’s from the first paragraph of page 50 (from the American journal of Human Genetics page numbering) of the paper Barkley quoted to support his argument that the distribution was “skewed”, which the authors show that it is not. It is under this major sub-heading: “Robust Estimates of African and Native American Ancestry in African Americans and European Americans”. Anyone is welcome to read the paper themselves, since in his old age Barkley Junior is having problems grasping the words “uniformly distributed”. Here is the link:
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4289685/
I have to put up the links for Barkley Rosser’s own references. If I was Barkley Rosser I wouldn’t put the link up either if it showed me to be an ass. It’s tough getting old kids, no doubt about it. Although Barkley does have a keen memory for “Quora” references, so check those out when you have time.
i hate to break this to you, moses, but your understanding of that quote is incorrect. it does NOT say uniformly distributed across the POPULATION. it says uniformly distributed across the GENOME. the genome is the genetic material, ie dna. what it says is that there are no unique parts of the dna which are solely attributed to native american or african ancestry-ie all parts of the genome can be equally influenced by african, native american, european, etc traits. hence a given chromosome, for example the 8th chromosome, has no special characteristics that favor native americans or africans. this is important, and i am glad you pointed it out. this means there is no subspecies in the human genome-nothing fundamentally different between the races. for those racists viewing this blog, this means that there is no superior or inferior race amongst humans.
moses, if you check out figure 3B in the text, you will see there is most definitely a distribution of native american heritage in the european american population which varies quite dramatically by region. this is not a uniformly distributed trait. further, similar commentary is provided throughout the text with regard to minority trait distribution around the country.
that said, thanks for the link, i really enjoyed reading it. my expertise is most definitely not in biology, but i interact with some of the best geneticists in the world on a daily basis, so i have learned to be somewhat competent in their discussions. however, most are not interested in this type of paper-and as a layman i find it fascinating to see what information we glean from the various genomes around the world. it is one of the few ways we have to possibly trace when and how humans migrated around the world as we evolved. our understanding of human history seems to be updated almost daily as we continue to investigate our genetic heritage.
Bruce Hall thinks 1973= 1967. When I made my Christmas list, I decided CoRev needed a calendar. Calling Amazon and asking them to also send Bruce one too!
peakloser never left the 80’s, so maybe he should get a new, updated calendar as well.
Menzie, good gotcha. Yup, got 1967 and 1973 mixed up. But I think the real point was that the U.S. took a moral stand in defense of a minority nation outnumbered 100 to 1 by their hostile neighbors and suffered the economic consequences. I’m not a Jew, but I do have Armenian ancestry and two grandparents who lost most of their families when the West chose to not intervene in a decidedly immoral action by the Turks. So, yes, I think that Nixon does deserve the blame for the economic downturn in 1973… and all of the credit for making a hard, but correct, moral choice. Nixon’s greatest immoral action? Not the Watergate coverup, but opening up trade with China and creating today’s economic and dictatorial monster.
As for Reagan, you can argue against his economic policies, but his hard stand against the Soviet Union freed millions of people from the enslavement of communism. So, yes, I think that Reagan does deserve the blame for the economic downturn in 1980… and all of the credit for making a hard, but moral, choice. I think the millions of people in Eastern Europe would agree.
In defense of the Arabs in 1973 and 1980, well, I can’t think of much in their defense.
Bruce Hall: Personally, I don’t blame Reagan for the 1980 downturn, given he wasn’t President until 1981, by which time the recession was over. I don’t even blame him for the 1981-82 recession, since that was mostly on account of the Volcker disinflation –although the tax cuts and spending boom did force Volcker’s hand at making the tightening more marked than it otherwise would have been (analogies to current situation very interesting).
@ Menzie
It’s amazing to me how many things you seemingly say out of kindness, and yet Bruce still got worked up. I hate Reagan, economically he was the worst President this country has ever had, and I have no reservations making that statement. And I happen to basically agree with you on the 1980 downturn. How much of the 1981-’82 downturn (which BTW, my father and my family, when I was a child severely suffered from on a personal level) can be blamed on Volcker I believe is debatable, as I believe Volcker’s hand was largely forced due to the inflation of the time, and any wise man would have done as Volcker did. I see Volcker as largely a hero, which is ironic considering how much my father and my family suffered during that time. But it’s best to look at things objectively and not in terms of your own circumstantial suffering.
However what Bruce misses, which is a common blunder for those with little economic education, is there was a “lag” or a “latent effect” of many of Reagan’s policies, which has weighed this country down over decades, and continues to effect us in a negative way to this very day.
BTW Menzie, don’t be bothering to tell Bruce Hall that the sky is blue come high noon tomorrow when Bruce Hall tells you “the sky is red” as he’s apt to think you were playing a game of “Gotcha”, and this is very hurtful for Bruce Hall.
Oh, wait. Jimmy Carter was president when the second Arab-caused oil crisis hit the U.S. economy. Okay, I’m giving Carter all of the economic blame that time and Reagan all of the moral credit for the dissolution of the “evil empire”. Sorry if I excited anyone by blaming Reagan for all of the economic pain of the early 1980s.
Reagan is on the hook for the 1982 recession which was much worse than that 1980 dip.
Reagan all of the moral credit for the dissolution of the “evil empire”.
One of the most clueless and naïve comments from you that I’ve read in a long time. Right up there with something I might have expected from sammy or CoRev. So you believe that the USSR collapsed because St. Ronnie stood in front of the Berlin Wall and told Gorby to tear it down. Just like that! Ever hear of the Soviet’s war in Afghanistan? Ever hear of some guy named Pope John Paul II? Ever hear of a worker’s union called “Solidarity” in a city called Gdansk? How about what happened at St. Nicholas Church in Leipzig? Or events along the Hungarian border? Ever take an economics course on the Soviet economic system? Can you name a single major weapon system deployed under Reagan that wasn’t already under development or initial deployment before Reagan took office?
Conservatives from an earlier age used to argue that the USSR would collapse because its economic system was hopelessly inefficient and could not support itself never mind a far flung empire. Those conservatives were right. Today’s conservatives have replaced hard headed economic and political analysis with some fairy tale version of history in which St. Ronnie’s magic words lead to the collapse of the Soviet Union. They also believe that touching St. Ronnie’s robe would cure scrofula.
I have more sympathy for the Arabs, Bruce.
The first oil shock represented a change of regime as the US supply peaked out. It moved market power to the OPEC countries, and they capitalized on this in 1973-1974. From 1972 to 1975, the Dubai oil price increased nearly five fold, and never returned to the earlier level. This strategy was unambiguously successful in economic terms.
And global oil demand rebounded quickly after the first oil shock, with growth averaging 5% pa from 1976-1979. Therefore, the prospect of tripling the price yet again, to $36 / barrel in 1980, looked like a worthy project. As it turned out, however, motorization was peaking in west, and from 1980 – 1985, oil demand fell by an average of 1.2% per year and never recovered the kind of resilience it had seen in the 1960 – 1979 period. The high oil price strategy under Saudi oil minister Zaki Yamani (still one of my favorites) after 1979 all but destroyed the Saudi economy, but I am not convinced this was easily foreseen in 1979.
https://www.prienga.com/blog/2014/11/11/understanding-saudi-oil-policy-the-lessons-of-79
Steven, you have sympathy for the Arabs because they ran up the price of oil and caused economic hardship for many in the West??? Well, I can see how you might have admiration for the Arabs exercising their near-monopoly power; I can see how you might have envy for the Arabs exercising their near-monopoly power; but sympathy for them exercising price extortion??? There is nothing about the Arab governments, morality (lack thereof), or economic situations that I have sympathy toward.
Fortunately, we have had some presidents and administrations (not all) that have had the foresight to encourage U.S. oil exploration and production placing us in a far better strategic position economically and politically.
Bruce –
A couple of quick thoughts here.
The OPEC countries thought they were getting a pittance for their oil in the 1960s, and I believe they were right. However, the Texas RRC had them by the short hairs, and they were forced to take a low price. When US oil production peaked, the power migrated to OPEC and they were finally able to seize control over their own assets and pricing. You may consider this illegitimate, but I personally believe countries have the rights to their own resources. This is not to invalidate US interests, but rather to acknowledge that the Saudis, for example, are also entitled to follow their self-interest.
The high oil prices policy of OPEC after 1979 was clearly a mistake as my above-linked article documents. Notwithstanding, this act laid down the basis for the Great Moderation, as it created 25% surplus capacity, the equivalent of 25 million barrels per day of spare capacity today (the actual is a rather scary 0.85 mbpd (0.8%) per the EIA). Thus, the hardship the OECD experienced in the 1979-1984 period created the preconditions of twenty years comparative economic stability.
I would add that the 1990 recession is of interest specifically for this reason. Menzie leans pretty hard on that 5.5% unemployment rate in July 1990 to argue that a recession was starting. It is not without some merit, but the more compelling takeaway is that oil can put the west into a recession in thirty days, and the 1990 recession — if we use my dates — serves as a template oil shock.
As for US oil production, I am all for it. I lay down the centrality of oil in my recent article, ‘Italy: Oil, the Euro and Populism’. The piece closes with this:
In a recent debate with Steve Bannon, conservative intellectual David Frum rejected Bannon’s populist apocalypse and stepped up to defend western liberalism. “It is absolutely clear that liberal democracy is in trouble now,” Frum said, “[but] the failures of a good system are not a reason to turn to an evil one. We have to review and repair.”
What should we review and repair, exactly? Is democracy the problem, or a lack of cheap oil?
Frum should have said, “Let’s hope US shales can supply as much oil as the world needs, for western liberalism hangs in the balance.” That would be closer to the truth.
Steven,
I think your account sort of downplays a crucial aspect of what happened in 1979 and after. You sort of suggest that the higher oil price policy was thought out ahead, but then in your link you do note that it was “turmoil” in Iran that triggered events. Indeed. The Islamic revolution was followed by a massive collapsed of Iranian production from about 6 mbpd down to about 600,000, which triggered the price increase. What you left out but is evident in the figures you provide is that KSA”a initial respoinse to this was to increase production to try to moderate the price increase. Once things stabilized by about 1981, the Saudis did decide to try to maintain the higher price that was then in place. While indeed demand began declining, the part of increasing supply you do not mention is the Iran-Iraq war, which started then. The second and third largest producers in OPEC broke the quotas to sell more to buy military equipment for their war. When the price collapsed it was not so much an OPEC decision but one by the Saudis who finally got tired of the cheating by Iran ans Iraq. In general your account is accurate, however.
Yes, you are correct, Barkley.
OPEC oil production peaked in July 1979 at 30.5 mbpd. (Bear in mind it’s only 35.3 mbpd today.) Oil production started falling precipitously from January 1980, and by August of that year — a month before the start of the Iran-Iraq War — was already down 5 mbpd. Of this, the lion’s share came from Iran and Kuwait. With the start of the war in late September 1980, oil production fell another 1.3 mbpd and another 1.5 mbpd the following month. By the end of October 1980, OPEC oil production had fallen almost 9 mbpd below in July 1979 peak.
To this point, the Saudis had not changed production materially, either up or down. The Saudis did, however, increase production, as you say, by 600 kbpd from Oct. 1980 to August 1981.
In September ’81, however, the Saudis cut production by 900 kbpd to prevent oil prices from falling below $30. These cuts accelerated, such that 18 months later the Saudis were producing an astounding 6.9 mbpd below their Nov. ’80 level of 10.4 mbpd. At this time, OPEC production was almost 17 mbpd below its July 1979 peak. It’s almost incredible to write this today.
The Saudis eased these cuts through 1984, but then resumed a restrictive policy, with production falling 7.5 mbpd below the 1979 peak in September 1985. This held oil prices around $24 / barrel, but was clearly unsustainable. Over the next several months, the Saudis would ease the cuts. A year later, oil prices had fallen by 60% and the Great Moderation was underway.
You are correct to say that the Saudis did not participate in the oil price spike which occurred in the Aug. 1979 – Aug. 1981 period, the first of those two recessions during the period.
However, the Saudis were the principal drivers of high oil prices from Sept. 1981 through year-end 1985, after which the oil price cratered. I think it is this latter, extended period which left a greater impression on me.
Graph here. http://www.prienga.com/blog/2018/12/13/opec-oil-production-during-the-iran-iraq-war
https://www.princetonpolicy.com/ppa-blog/2018/12/12/italy-oil-euro-and-populism
Is this the type comment that I would get flagged for by James Hamilton??—>> for stating general truths related to certain groups (you’ll play hell finding me say in absolute terms). Why do I get flagged for these comments and Republicans never do?? You’ll see this in many places, including NYT’s comments section. When I say it I am a “r–ist” when Bruce or a Republican says it, he’s a “God-loving patriot”. Although Menzie is a hair looser on these things (which I believe is to Menzie’s credit in the open-dialogue department), kids, this is why Democrats always lose to Republicans in the rhetoric department.
BTW, Persians are not Arabs folks—this covers Iran, and apparently some people don’t think Iran plays a big role in Oil prices, because most Persians will get very pissed when you mistakenly label them “Arabs”.
The proper way to make that argument would have been to say “Mid-East” or Middle East, and put it in regional terms, not ethnic terms, but when the Republican faithful say it in ethnic terms it’s patriotic and “God-fearing”, when a Democrat does it, they are “r–ist”.
I leave it to Menzie to post this or not, I won’t be angry at him either way. I got my “vent” out.
Moses, you might have interpreted my point about Arab near-monopoly on oil production (prior to U.S. production ramp-up) as OPEC. No, I’m not including Russia or Iran or Venezuela when I say “Arab”. Primarily I refer to Saudi Arabia, but also Iraq, Qatar, Libya, Algeria, and UAE which dwarf Iran’s production. Some people might think of the “Persians” as Arabs, but I do not. Some people might think of the Turks as Arabs, but I do not.
For your edification: https://www.opec.org/opec_web/static_files_project/media/downloads/publications/AR%202017.pdf (see table 7). Iran is an important producer (1/8 of OPEC total), but not the major player and certainly nowhere near the total of the Arab countries. Besides, Iran has been shunted to the sidelines for awhile (a very positive development).
Come on, face it, Saudi Arabia is the OPEC kingpin and really sets the oil prices. They whipsawed the western economies in the early 1970s and 1980s. Steven may have “sympathy” for their economic “mistakes”, but I put them into a category similar to China when it comes to economics: a source of convenience, not an ally or “sympathetic” trading partner. That “convenience” comes with its own negative unintended consequences.
I do, however, agree with Steven that “Let’s hope US shales can supply as much oil as the world needs, for western (classical) liberalism hangs in the balance.” That would be closer to the truth.
Now this is an accomplishment! You just made Princeton Steve look like an informed and caring person. Your next goal should be be even more robotic than Pence was yesterday.
“I think that Reagan does deserve the blame for the economic downturn in 1980”.
Reagan took office on 1/20/1981. Of course during the 1984 campaign, the infamous Morning in America commercial led the voters to believe Jimmy Carter was responsible for the 1982 recession as if Reagan took office on 1/20/1983.
pgl see Menzie’s response regarding this above.
I saw it. Maybe you should read it again and again.
You get all pissy whenever something you wrote is shown to be bunk. Since most of what you write is bunk – you must be in a pissy mood most of the time. Seek professional help!
“the tax cuts and spending boom did force Volcker’s hand at making the tightening more marked than it otherwise would have been”.
I guess we can buy Bruce a magic decoder ring so he might one day grasp phrases like these!
“As for Reagan, you can argue against his economic policies, but his hard stand against the Soviet Union freed millions of people from the enslavement of communism.”
and ultimately led to the election of a dictator, putin, by folks who are pining for the old soviet days.
Between the fall of the Soviet Union and Putin – we had the very corrupt regime of Yeltsin. Russia in the 1990’s was not exactly a vibrant democratic free market economy. No it it was crony capitalism at its worse with the income of the typical Russian declining substantially.
pgl Russia is Russia; the rest of the former Soviet Union is not. Millions freed. But I appreciate your attempt at parsing.
Try finding and reading Joseph Stiglitz’s “Who Lost Russia”. It was a great account of the disaster the Yeltsin years were.
C’mon Bruce – we know you flunked American history. Do not pretend you know anything about Russian history.
Ask Crimea about being free. Bruce’s forte is not history or economics for sure. But modern events in Ukraine – there he beyond clueless.
Well, not quite. Three of the smaller Soviet republics are free (Estonia, Latvia and Lithuania), but the rest are every bit as bad as Russia. Uzbekistan isn’t exactly known as an island of freedom. In fact, it has the world’s second highest rate of human slavery.
https://en.wikipedia.org/wiki/Uzbekistan
The other assorted “stans” won’t win any human rights prizes either.
pgl and 2slug,
You are “technically” correct; you are completely wrong… in fact: https://www.npr.org/news/graphics/2014/03/map-soviet-warsaw-624.png
“Soviet allied countries” were, in fact, without their own real power and a defacto part of the Soviet Union (ask the Poles and Hungarians and Czechs and East Germans, etc).
https://history.state.gov/milestones/1989-1992/fall-of-communism
Of course, all of this is way off subject, but it’s interesting to see how those mired in minutia fail to see the bigger picture.
Bruce Hall I think you utterly and completely misunderstood my comment. I was commenting on your apparent claim that most of the former Soviet republics are now free thanks to Reagan (“Millions freed”) with the exception of Russia (“Russia is Russia”). Only three of the former republics can be considered free today. The rest are at least as unfree as they were during the USSR days.
http://glineq.blogspot.com/2017/12/democracy-of-convenience-not-of-choice.html
Gorbechev’s policies, oil prices and the Soviet Union’s failure in Afghanistan (Thank you, President Carter) freed millions of people. Reagan was on the right side of this shift, but his policies did not cause it. Way too U.S-centric. Way too much Reagan worship.
Yep. A lot of today’s conservatives have taken a very arrogant, US centric view of how the Cold War ended. In their view the people in the USSR and the Warsaw Pact countries were just passive blobs who deserve no credit for their own political changes. It was all because of St. Ronald the Great who liberated the oppressed and helpless masses behind the Iron Curtain. It’s almost a Disney version of history. The most significant thing that the US did to end the Cold War was to sign on to the Helsinki Accords in 1975. As Hannah Arendt taught us, the key to totalitarianism is that it removes any space between the individual and the state. The Helsinki Accords created the kind of space that is a necessary (but not sufficient) condition for freedom.
Reagan did say something about tearing down some wall. No – he did not tear it down but then Trump is failing to build his stupid wall.
Let’s not forget Yeltsin. Although this would be later than the Reagan era being discussed in this thread. Yeltsin was a very important figure, and I argue visionary figure—who is largely forgotten and “written off” due to his own proclivity for drinking. Winston Churchill loved heavy drinking too, it doesn’t mean we “write him off” as a great leader. How many men would have faced off against or faced down the Russian parliament of 1993?? I would argue only a very small handful of leaders (of ANY nation would/could have done that). And no matter what you think of Yeltsin’s “power handoff” to Putin, admittedly sloppy, Yeltsin’s reforms made Russia a better place, and were better than would have happened had Yeltsin let the Russian parliament takeover. This is fact.
https://www.amazon.com/Yeltsin-Life-Timothy-J-Colton/dp/0465012728/ref=sr_1_fkmr0_2?ie=UTF8&qid=1544649519&sr=8-2-fkmr0&keywords=yeltsin+bio
A pretty good breakdown, not all of it flattering to Yeltsin.
https://www.rferl.org/a/russia-players-1993-crisis/25125000.html
“Yeltsin’s reforms made Russia a better place”.
Joseph Stiglitz would strongly disagree. See his “Who Lost Russia” for the damage that the crony capitalism during the 1990’s created.
A couple of folks here think Yeltsin did a great job at making Russia’s economy during the 1990’s a great place. This is so factually wrong that I doubt even Team Trump would step into this misinformation. OK for all you know nothings, read the excellent account by Joseph Stiglitz:
https://studylib.net/doc/7811370/chapter-5–who-lost-russia
“pgl and 2slug,
You are “technically” correct; you are completely wrong… in fact: https://www.npr.org/news/graphics/2014/03/map-soviet-warsaw-624.png
“Soviet allied countries” were, in fact, without their own real power and a defacto part of the Soviet Union (ask the Poles and Hungarians and Czechs and East Germans, etc).”
Did Bruce Hall flunk reading comprehension. Yes these allied nations were under de facto Soviet rule before 1990. Neither 2slug nor I denied that. 2slug was questioning whether many of these nations are as free and democratic as Bruce Hall assumes they are. Listen Bruce – try READING what others have written before babbling your usual nonsense. DAMN!
“2slugbaits
December 13, 2018 at 9:13 am
Bruce Hall I think you utterly and completely misunderstood my comment.”
2slug – yes he did utterly and completely misunderstood your excellent comment. Bruce has a real talent for doing this!