The Oil Curse

Governments find it bureaucratically easier and politically more popular to collect revenues from their oil sectors than to collect taxes from the population at large.

Oil supplies begin to grow tighter, as rising demand outpaced new discoveries. The major oil exporters of the developing world started to collude through the Organization of Petroleum Exporting Countries (OPEC). The United States also became increasingly dependent on foreign supplies, as its domestic production began to decline while consumption soared. In addition, the Bretton Woods system of fixed exchange rates—which had contributed to keeping prices stable—fell apart.

They also controlled the shipping and marketing of almost all the world’s petroleum, which enabled them to keep prices steady and capture most of the profits for themselves.