History of Oil Exploration and Production

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In 1940, the Italian government began oil exploration in Libya. Due to World War II, early exploration was interrupted and viable deposits for international use were not discovered until 1959. In 1955, Libya drafted a petroleum law, which allowed a structure for foreign oil companies to make exploration, development, and production decisions while giving the government the power to only be a tax collector (Waddams, 1980, as cited in St John, 2007, pp. 204). In 1962, Libya joined the Organization of Petroleum Exporting Countries (OPEC). Since Libya is located closer to European markets, it should have a competitive advantage over it competitors. Also, not only does it have a geographical advantage over its competitors but its supply is not as susceptible to disruptions because Libya does not depend on oil pipelines or passage through the Suez Canal to reach markets in Europe (McLachlan, 1989; Gurney, 1996, as cited in St John, 2007, pp. 204). Muammar al-Qaddafi was appointed commander-in-chief of the Libyan armed forces on September 1, 1969 after the Free Unionist Officers seized power from the King and designated Revolutionary Command Council (RCC) as the governing power. The RCC and Qaddafi’s main concern became apparent within weeks of seizing power. The Prime Minister Mahmud Suleiman al-Maghrabi suggested that the price of crude oil is lower than it should be (Middle East Journal, 1970 as cited in St John, 2007, pp. 206). “It is well-known that [oil] prices are unfair and were fixed for the interest of the companies more than the government. The action we have taken is that we set up a committee to study the matter …our share of oil income will be determined after technicians have made careful study of the matter so that when... ... middle of paper ... ...EC Oil Pricing On Output, Prices, and Exchange Rates In the United States and Other Industrialized Countries. Congress of the United States Congressional Budget Office. Retrieved from http://www.cbo.gov/ftpdocs/51xx/doc5190/doc06-Entire.pdf Gue, E. (2011). Oil Prices: Buy the Dip in Energy-Related Stocks. Retrieved from http://www.investingdaily.com/tes/18554/oil-prices-buy-the-dip-in-energy-related-stocks.html Metz, H.C. (1987). Libya: A country Study. Washington: GPO for the Library of Congress. Retrieved fromhttp://countrystudies.us/libya/ St John, R.B. (2007) Libya’s Oil & Gas Industry: Blending Old and New. The Journal of North African Studies, 12(2), 203-216. doi:10.1080/13629380701220428 U.S. bombs Libya. This Day in History, April 14, 1986. History.com (n.d.) Retrieved from http://www.history.com/this-day-in-history/us-bombs-libya

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