This is an article from TIME
written on Jan.19, 1976. It makes a fascinating read because thirty-two
years later, we're using some of the same language with the same
players.

A prime goal of U.S. oil diplomacy over the past
two years has been to break up the Organization of Petroleum Exporting
Countries. The U.S. tried to weld consuming countries into a bloc that
would reduce oil imports and accelerate development of alternative
sources of energy, with the aim of shrinking OPEC revenues enough to
prod some of its 13 member nations to cut prices, thus dissolving the
cartel. The strategy seemed justified: OPEC's quintupling of prices
since late 1973 has aggravated both inflation and recession in
industrialized countries. But the attempt simply did not work, and now
the policy is being quietly shelved. The U.S. Government has decided
that it cannot beat the cartel and that, as a result, it may just as
well learn to live with it—perhaps even gain politically from its
existence. Assistant Treasury Secretary Gerald Parsky sums up the new
mood: "Breaking up OPEC would be detrimental to the direction in
which we want to go."

The softening U.S. attitude is prompted by several factors. Early
predictions that a massive transfer of wealth to the oil-producing
states would cripple the industrial world's financial and production
systems have proved unfounded. Most of the newly rich producers have
become big spenders, and are creating lush export markets for U.S.,
European and Japanese goods.

Much of the rapid rise in oil prices has already been absorbed by
consumer countries. According to a recent study by the Brookings
Institution, even with higher oil prices the growth of disposable
income in the developed world will be slowed by only 3% or so between
now and 1980.

Then, too, the Administration has been unable to rally Europeans and the
Japanese to its anti-OPEC strategy. They are far more dependent on oil
imports than the U.S. and are exceedingly reluctant to annoy the
producing states.

France has refused even to join the International Energy Agency, which
the U.S. hoped would unite consumer nations in a struggle against OPEC
pricing policies. Britain, which is pinning its hopes for recovery on
North Sea oil, is banking heavily on continuing high crude prices;
Prime Minister Harold Wilson says it is "not entirely misplaced
humor" that Britain eventually might actually join OPEC. Non-OPEC
producers like Canada and Mexico have also benefited from the towering
cost of oil and are not about to press for reductions.

Moreover, OPEC has proved remarkably resilient because its members are
well aware that their power to fix prices lies in their ability to
maintain a united front. Thus cartel members have been able to hold
traditional animosities in check—at least so far. Iran and Iraq
managed to settle a long-smoldering border dispute, and radical Algeria
fell in line behind Saudi Arabia's moderate pricing policies when the
Saudis presented Algeria with a generous loan. Un-gluing OPEC, if it
could still be done at all, would require extraordinarily disruptive
measures by the U.S.; for example, actively fostering friction between
such rivals as Iran and Saudi Arabia.

But experts fear that disruptive measures could lead to unpredictable
turmoil, especially in the already explosive Middle East. That kind of
strategy, says a State Department Middle East specialist, would be
"so politically damaging as not to be worth the effort."

Ending Confrontation. Instead of confrontation, the U.S. is now seeking
to influence OPEC through accommodation with Saudi Arabia, the cartel's
most influential member and biggest producer. The Saudis' avid
antiCommunism, their support of Egyptian President Anwar Sadat against
more radical Arab leaders and their relatively moderate position on oil
pricing make them particularly acceptable to American policymakers.
Despite its vast wealth, Saudi Arabia is still essentially a feudal
state badly in need of both industrial and agricultural development. In
the past year or so, the U.S. has signed agreements to provide the
Saudis with military and technical assistance, including
electrification projects and agricultural development programs. Says
Saudi Information Minister Muhammed Abdo Yamani: "We see signs
that make us optimistic about American policy."

The strategy worked last fall, when the Saudis held the latest OPEC
price boost to a stated 10%, though some cartel members had wanted much
more.
Whether OPEC will continue to present even a facade of moderation,
however, remains open to question. Iranian Interior Minister Jamshid
Amouzegar recently noted that with the expected worldwide economic
recovery, new oil price boosts "will become possible again in
mid-1976."