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The 1970s energy crisis occurred when the
Western world The Western world, also known as the West, primarily refers to the various nations and states in the regions of Europe, North America, and Oceania.
, particularly the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
,
Canada Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by to ...
,
Western Europe Western Europe is the western region of Europe. The region's countries and territories vary depending on context. The concept of "the West" appeared in Europe in juxtaposition to "the East" and originally applied to the ancient Mediterranean ...
,
Australia Australia, officially the Commonwealth of Australia, is a sovereign country comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands. With an area of , Australia is the largest country by ...
, and
New Zealand New Zealand ( mi, Aotearoa ) is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and over 700 smaller islands. It is the sixth-largest island coun ...
, faced substantial
petroleum Petroleum, also known as crude oil, or simply oil, is a naturally occurring yellowish-black liquid mixture of mainly hydrocarbons, and is found in geological formations. The name ''petroleum'' covers both naturally occurring unprocessed crud ...
shortages as well as elevated prices. The two worst crises of this period were the
1973 oil crisis The 1973 oil crisis or first oil crisis began in October 1973 when the members of the Organization of Arab Petroleum Exporting Countries (OAPEC), led by Saudi Arabia, proclaimed an oil embargo. The embargo was targeted at nations that had su ...
and the
1979 energy crisis The 1979 oil crisis, also known as the 1979 Oil Shock or Second Oil Crisis, was an energy crisis caused by a drop in oil production in the wake of the Iranian Revolution. Although the global oil supply only decreased by approximately four pe ...
, when, respectively, the
Yom Kippur War The Yom Kippur War, also known as the Ramadan War, the October War, the 1973 Arab–Israeli War, or the Fourth Arab–Israeli War, was an armed conflict fought from October 6 to 25, 1973 between Israel and a coalition of Arab states led by E ...
and the
Iranian Revolution The Iranian Revolution ( fa, انقلاب ایران, Enqelâb-e Irân, ), also known as the Islamic Revolution ( fa, انقلاب اسلامی, Enqelâb-e Eslâmī), was a series of events that culminated in the overthrow of the Pahlavi dyna ...
triggered interruptions in Middle Eastern oil exports. The crisis began to unfold as petroleum production in the United States and some other parts of the world peaked in the late 1960s and early 1970s. World oil production per capita began a long-term decline after 1979. The oil crises prompted the first shift towards energy-saving (particular, fossil fuel-saving) technologies. The major industrial centers of the world were forced to contend with escalating issues related to petroleum supply. Western countries relied on the resources of countries in the Middle East and other parts of the world. The crisis led to stagnant economic growth in many countries as oil prices surged. Although there were genuine concerns with supply, part of the run-up in prices resulted from the perception of a crisis. The combination of stagnant growth and price inflation during this era led to the coinage of the term '' stagflation''. By the 1980s, both the recessions of the 1970s and adjustments in local economies to become more efficient in petroleum usage, controlled demand sufficiently for petroleum prices worldwide to return to more sustainable levels. The period was not uniformly negative for all economies. Petroleum-rich countries in the Middle East benefited from increased prices and the slowing production in other areas of the world. Some other countries, such as Norway, Mexico, and Venezuela, benefited as well. In the United States,
Texas Texas (, ; Spanish: ''Texas'', ''Tejas'') is a state in the South Central region of the United States. At 268,596 square miles (695,662 km2), and with more than 29.1 million residents in 2020, it is the second-largest U.S. state by ...
and
Alaska Alaska ( ; russian: Аляска, Alyaska; ale, Alax̂sxax̂; ; ems, Alas'kaaq; Yup'ik: ''Alaskaq''; tli, Anáaski) is a state located in the Western United States on the northwest extremity of North America. A semi-exclave of the U ...
, as well as some other oil-producing areas, experienced major economic booms due to soaring oil prices even as most of the rest of the nation struggled with the stagnant economy. Many of these economic gains, however, came to a halt as prices stabilized and dropped in the 1980s.


Key periods


Arab-Israeli conflict

Ever since the recreation of the State of Israel in 1948 there has been
Arab–Israeli conflict The Arab–Israeli conflict is an ongoing intercommunal phenomenon involving political tension, military conflicts, and other disputes between Arab countries and Israel, which escalated during the 20th century, but had mostly faded out by th ...
in the
Middle East The Middle East ( ar, الشرق الأوسط, ISO 233: ) is a geopolitical region commonly encompassing Arabian Peninsula, Arabia (including the Arabian Peninsula and Bahrain), Anatolia, Asia Minor (Asian part of Turkey except Hatay Pro ...
. There was a List of wars involving Israel and Arab States including the
Suez Crisis The Suez Crisis, or the Second Arab–Israeli war, also called the Tripartite Aggression ( ar, العدوان الثلاثي, Al-ʿUdwān aṯ-Ṯulāṯiyy) in the Arab world and the Sinai War in Israel,Also known as the Suez War or 1956 Wa ...
also known as the Second Arab–Israeli war (1956). This was in response to Israels southern port
Eilat Eilat ( , ; he, אֵילַת ; ar, إِيلَات, Īlāt) is Israel's southernmost city, with a population of , a busy port and popular resort at the northern tip of the Red Sea, on what is known in Israel as the Gulf of Eilat and in Jorda ...
being blockaded by Egypt and Egypt
nationalized Nationalization (nationalisation in British English) is the process of transforming privately-owned assets into public assets by bringing them under the public ownership of a national government or state. Nationalization usually refers to p ...
the
Suez Canal The Suez Canal ( arz, قَنَاةُ ٱلسُّوَيْسِ, ') is an artificial sea-level waterway in Egypt, connecting the Mediterranean Sea to the Red Sea through the Isthmus of Suez and dividing Africa and Asia. The long canal is a popula ...
from mainly French and British investors. The invasions goal was regime change of
Gamal Abdel Nasser Gamal Abdel Nasser Hussein, . (15 January 1918 – 28 September 1970) was an Egyptian politician who served as the second president of Egypt from 1954 until his death in 1970. Nasser led the Egyptian revolution of 1952 and introduced far-r ...
who was aligning with the
Soviet Union The Soviet Union,. officially the Union of Soviet Socialist Republics. (USSR),. was a transcontinental country that spanned much of Eurasia from 1922 to 1991. A flagship communist state, it was nominally a federal union of fifteen nationa ...
. In 1967, the
Six-Day War The Six-Day War (, ; ar, النكسة, , or ) or June War, also known as the 1967 Arab–Israeli War or Third Arab–Israeli War, was fought between Israel and a coalition of Arab states (primarily Egypt, Syria, and Jordan) from 5 to 10 ...
broke out, this was the invasion of the
Sinai Peninsula The Sinai Peninsula, or simply Sinai (now usually ) (, , cop, Ⲥⲓⲛⲁ), is a peninsula in Egypt, and the only part of the country located in Asia. It is between the Mediterranean Sea to the north and the Red Sea to the south, and is a ...
in
Egypt Egypt ( ar, مصر , ), officially the Arab Republic of Egypt, is a List of transcontinental countries, transcontinental country spanning the North Africa, northeast corner of Africa and Western Asia, southwest corner of Asia via a land bridg ...
all the way to the
Suez Canal The Suez Canal ( arz, قَنَاةُ ٱلسُّوَيْسِ, ') is an artificial sea-level waterway in Egypt, connecting the Mediterranean Sea to the Red Sea through the Isthmus of Suez and dividing Africa and Asia. The long canal is a popula ...
by Israel, and the Suez Canal was closed for 8 years by Egypt during the occupation. The canal was cleared in 1974 and reopened in 1975 after the 1973
Yom Kippur War The Yom Kippur War, also known as the Ramadan War, the October War, the 1973 Arab–Israeli War, or the Fourth Arab–Israeli War, was an armed conflict fought from October 6 to 25, 1973 between Israel and a coalition of Arab states led by E ...
in which Egypt tried to take back the occupied land of the Sinai Peninsula.
OAPEC The Organization of Arab Petroleum Exporting Countries (OAPEC) is a multi-governmental organization headquartered in Kuwait which coordinates energy policies among oil-producing Arab nations. OAPEC's primary objective is safeguarding the cooperati ...
countries cut production of oil and placed an
embargo Economic sanctions are commercial and financial penalties applied by one or more countries against a targeted self-governing state, group, or individual. Economic sanctions are not necessarily imposed because of economic circumstances—they m ...
on oil exports to the United States when
Richard Nixon Richard Milhous Nixon (January 9, 1913April 22, 1994) was the 37th president of the United States, serving from 1969 to 1974. A member of the Republican Party, he previously served as a representative and senator from California and was ...
requested $2.2 billion to support Israel in the Yom Kippur War on October 19th, 1973. The embargo only lasted a few months until January 1974, but the price of oil remained high even after the embargo was lifted.


Production peaks around 1970

The real price of petroleum was stable in the 1970 timeframe, but there had been a sharp increase in American imports, putting a strain on American balance of trade, alongside other developed nations. During the 1960s, petroleum production in some of the world's top producers with extraction technology at the time began to peak.
Germany Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwee ...
reached its production peak in 1966,
Venezuela Venezuela (; ), officially the Bolivarian Republic of Venezuela ( es, link=no, República Bolivariana de Venezuela), is a country on the northern coast of South America, consisting of a continental landmass and many islands and islets in th ...
and the United States in 1970, and
Iran Iran, officially the Islamic Republic of Iran, and also called Persia, is a country located in Western Asia. It is bordered by Iraq and Turkey to the west, by Azerbaijan and Armenia to the northwest, by the Caspian Sea and Turkmeni ...
in 1974.
Canada Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by to ...
's conventional oil production peaked around this same time (though non-conventional production later helped revive Canadian production to some degree). The worldwide production per capita peaked soon afterward. Although production in other parts of the world was increasing, the peaks in these regions began to put substantial upward pressure on world oil prices. Equally as important, control of the oil supply became an increasingly important problem as countries like West Germany and the U.S. became increasingly dependent on foreign suppliers for this key resource.


1973 oil crisis

The 1973 oil crisis is a direct consequence of the US production peak in late 1960 and the beginning of 1971 (and shortages, especially for heating oil, started from there). The "embargo" as described below is the "practical name" given to the crisis. For the main Arab producers, the "embargo" allowed them to show to "the
Arab street The Arab street ( ar, الشارع العربي, ''ash-shāriʿ al-ʿarabī'') is an expression referring to the spectrum of public opinion in the Arab world, often as opposed or contrasted to the opinions of Arab governments.Friedman, ThomasUnd ...
" that they were doing something for the Palestinians. In real market terms (number of barrels) the embargo was almost a non-event, and only from a few countries, towards a few countries. The "Embargo" was never effective from Saudi Arabia towards the US, as reported by
James E. Akins James Elmer Akins (October 15, 1926 – July 15, 2010)"James E. Akins." ''Marquis Who's Who, 2007''. Reproduced in Biography Resource Center''. Farmington Hills, Mich.: Gale, 2008. Document Number: K2016266648. "...ambassador to, Saudi Arabi ...
in interview at 24:10 in the documentary "la face cachée du pétrole part 2". Akins, who audited US capacity for Nixon after US peak, was US ambassador in Saudi Arabia at that time.
Lawrence Rocks The Lawrence Rocks are a group of two rocky islets, 6.8 ha and 1.5 ha in area, with an associated reef, 2.4 km south-east of Point Danger in western Victoria, Australia, and about 6 km south-east of the city of Portland. ...
and Richard Runyon captured the unfolding of these events at the time in The Energy Crisis book. In October 1973, the members of Organization of Arab Petroleum Exporting Countries or the OAPEC (consisting of the
Arab The Arabs (singular: Arab; singular ar, عَرَبِيٌّ, DIN 31635: , , plural ar, عَرَب, DIN 31635: , Arabic pronunciation: ), also known as the Arab people, are an ethnic group mainly inhabiting the Arab world in Western Asia, ...
members of
OPEC The Organization of the Petroleum Exporting Countries (OPEC, ) is a cartel of countries. Founded on 14 September 1960 in Baghdad by the first five members (Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela), it has, since 1965, been headqua ...
) proclaimed an oil
embargo Economic sanctions are commercial and financial penalties applied by one or more countries against a targeted self-governing state, group, or individual. Economic sanctions are not necessarily imposed because of economic circumstances—they m ...
"in response to the U.S. decision to re-supply the Israeli military" during the
Yom Kippur war The Yom Kippur War, also known as the Ramadan War, the October War, the 1973 Arab–Israeli War, or the Fourth Arab–Israeli War, was an armed conflict fought from October 6 to 25, 1973 between Israel and a coalition of Arab states led by E ...
; it lasted until March 1974.Oil Embargo, 1973–1974
at US State Department
OAPEC declared it would limit or stop oil shipments to the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
and other countries if they supported
Israel Israel (; he, יִשְׂרָאֵל, ; ar, إِسْرَائِيل, ), officially the State of Israel ( he, מְדִינַת יִשְׂרָאֵל, label=none, translit=Medīnat Yīsrāʾēl; ), is a country in Western Asia. It is situated ...
in the conflict. With the US actions seen as initiating the oil embargo, the long-term possibility of embargo-related high oil prices, disrupted supply and recession, created a strong rift within
NATO The North Atlantic Treaty Organization (NATO, ; french: Organisation du traité de l'Atlantique nord, ), also called the North Atlantic Alliance, is an intergovernmental military alliance between 30 member states – 28 European and two N ...
; both European countries and Japan sought to disassociate themselves from the US Middle East policy. Arab oil producers had also linked the end of the embargo with successful US efforts to create peace in the Middle East, which complicated the situation. To address these developments, the Nixon Administration began parallel negotiations with both Arab oil producers to end the embargo, and with
Egypt Egypt ( ar, مصر , ), officially the Arab Republic of Egypt, is a List of transcontinental countries, transcontinental country spanning the North Africa, northeast corner of Africa and Western Asia, southwest corner of Asia via a land bridg ...
,
Syria Syria ( ar, سُورِيَا or سُورِيَة, translit=Sūriyā), officially the Syrian Arab Republic ( ar, الجمهورية العربية السورية, al-Jumhūrīyah al-ʻArabīyah as-Sūrīyah), is a Western Asian country loc ...
, and Israel to arrange an Israeli pull back from the Sinai and the Golan Heights after the fighting stopped. By January 18, 1974, Secretary of State
Henry Kissinger Henry Alfred Kissinger (; ; born Heinz Alfred Kissinger, May 27, 1923) is a German-born American politician, diplomat, and geopolitical consultant who served as United States Secretary of State and National Security Advisor under the presid ...
had negotiated an Israeli troop withdrawal from parts of the Sinai. The promise of a negotiated settlement between Israel and Syria was sufficient to convince Arab oil producers to lift the embargo in March 1974. By May, Israel agreed to withdraw from the
Golan Heights The Golan Heights ( ar, هَضْبَةُ الْجَوْلَانِ, Haḍbatu l-Jawlān or ; he, רמת הגולן, ), or simply the Golan, is a region in the Levant spanning about . The region defined as the Golan Heights differs between di ...
. Independently, the OPEC members agreed to use their leverage over the world price-setting mechanism for oil to stabilize their real incomes by raising world oil prices. This action followed several years of steep income declines after the recent failure of negotiations with the major Western oil companies earlier in the month. For the most part, industrialized economies relied on crude oil, and OPEC was their major supplier. Because of the dramatic inflation experienced during this period, a popular economic theory has been that these price increases were to blame, as being suppressive of economic activity. However, the causality stated by this theory is often questioned. The targeted countries responded with a wide variety of new, and mostly permanent, initiatives to contain their further dependency. The 1973 "oil price shock", along with the
1973–1974 stock market crash The 1973–1974 stock market crash caused a bear market between January 1973 and December 1974. Affecting all the major stock markets in the world, particularly the United Kingdom, it was one of the worst stock market downturns since the Great ...
, have been regarded as the first event since the
Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
to have a persistent economic effect.


1979 energy crisis

A crisis emerged in the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
in 1979 during the wake of the
Iranian Revolution The Iranian Revolution ( fa, انقلاب ایران, Enqelâb-e Irân, ), also known as the Islamic Revolution ( fa, انقلاب اسلامی, Enqelâb-e Eslâmī), was a series of events that culminated in the overthrow of the Pahlavi dyna ...
. Amid massive protests, the Shah of Iran,
Mohammad Reza Pahlavi , title = Shahanshah Aryamehr Bozorg Arteshtaran , image = File:Shah_fullsize.jpg , caption = Shah in 1973 , succession = Shah of Iran , reign = 16 September 1941 – 11 February 1979 , coronation = 26 Octob ...
, fled his country in early 1979, allowing the
Ayatollah Ayatollah ( ; fa, آیت‌الله, āyatollāh) is an honorific title for high-ranking Twelver Shia clergy in Iran and Iraq that came into widespread usage in the 20th century. Etymology The title is originally derived from Arabic word ...
Khomeini to gain control. The protests shattered the Iranian oil sector. While the new regime resumed oil exports, it was inconsistent and at a lower volume, forcing prices to go up.
Saudi Arabia Saudi Arabia, officially the Kingdom of Saudi Arabia (KSA), is a country in Western Asia. It covers the bulk of the Arabian Peninsula, and has a land area of about , making it the fifth-largest country in Asia, the second-largest in the Ara ...
and other
OPEC The Organization of the Petroleum Exporting Countries (OPEC, ) is a cartel of countries. Founded on 14 September 1960 in Baghdad by the first five members (Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela), it has, since 1965, been headqua ...
nations, under the presidency of Dr. Mana Alotaiba increased production to offset the decline, and the overall loss in production was about 4 percent. However, a widespread panic resulted, driving the price far higher than would be expected under normal circumstances. In 1980, following the Iraqi invasion of Iran, oil production in Iran nearly stopped, and Iraq's oil production was severely cut as well. After 1980, oil prices began a decline as other countries began to fill the production shortfalls from Iran and Iraq.


1980s oil glut

The 1973 and
1979 energy crisis The 1979 oil crisis, also known as the 1979 Oil Shock or Second Oil Crisis, was an energy crisis caused by a drop in oil production in the wake of the Iranian Revolution. Although the global oil supply only decreased by approximately four pe ...
had caused petroleum prices to peak in 1980 at over US$35 per barrel (US$ in today's dollars). Following these events slowing industrial economies and stabilization of supply and demand caused prices to begin falling in the 1980s. The glut began in the early 1980s as a result of slowed economic activity in industrial countries (due to the 1973 and 1979 energy crises) and the
energy conservation Energy conservation is the effort to reduce wasteful energy consumption by using fewer energy services. This can be done by using energy more effectively (using less energy for continuous service) or changing one's behavior to use less service (f ...
spurred by high fuel prices. The
inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduct ...
adjusted real 2004 dollar value of oil fell from an average of $78.2 per barrel in 1981 to an average of $26.8 in 1986. In June 1981, ''
The New York Times ''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid ...
'' stated an "Oil glut! ... is here" and ''
Time Magazine ''Time'' (stylized in all caps) is an American news magazine based in New York City. For nearly a century, it was published weekly, but starting in March 2020 it transitioned to every other week. It was first published in New York City on Ma ...
'' stated: "the world temporarily floats in a glut of oil", though the next week a New York Times article warned that the word "glut" was misleading, and that in reality, while temporary surpluses had brought down prices somewhat, prices were still well above pre-energy crisis levels. This sentiment was echoed in November 1981, when the CEO of
Exxon ExxonMobil Corporation (commonly shortened to Exxon) is an American multinational oil and gas corporation headquartered in Irving, Texas. It is the largest direct descendant of John D. Rockefeller's Standard Oil, and was formed on November 3 ...
also characterized the glut as a temporary surplus, and that the word "glut" was an example of "our American penchant for exaggerated language". He wrote that the main cause of the glut was declining consumption. In the United States, Europe and Japan, oil consumption had fallen 13% from 1979 to 1981, due to "in part, in reaction to the very large increases in oil prices by the Organization of Petroleum Exporting Countries and other oil exporters", continuing a trend begun during the 1973 price increases. After 1980, reduced demand and overproduction produced a glut on the world market, causing a six-year-long decline in oil prices culminating with a 46 percent price drop in 1986.


Effects


Recession

The decade of the 1970s was a period of limited or negative economic growth due in part to the energy crises of that decade. Although the mid decade was the worst period for the United States the economy was generally weak until the 1980s. The period marked the end of the general post-World War II economic boom. It differed from many previous recessions as being a stagflation, where high
unemployment Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for work during the refe ...
coincided with high
inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduct ...
. Other causes that contributed to the recession included the
Vietnam War The Vietnam War (also known by #Names, other names) was a conflict in Vietnam, Laos, and Cambodia from 1 November 1955 to the fall of Saigon on 30 April 1975. It was the second of the Indochina Wars and was officially fought between North Vie ...
, which turned out costly for the
United States of America The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territo ...
and the fall of the
Bretton Woods system The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States, Canada, Western European countries, Australia, and Japan after the 1944 Bretton Woods Agreement. The Bretto ...
. The emergence of newly industrialized countries rose competition in the metal industry, triggering a steel crisis, where industrial core areas in North America and Europe were forced to re-structure. The
1973–1974 stock market crash The 1973–1974 stock market crash caused a bear market between January 1973 and December 1974. Affecting all the major stock markets in the world, particularly the United Kingdom, it was one of the worst stock market downturns since the Great ...
made the recession evident. According to the
National Bureau of Economic Research The National Bureau of Economic Research (NBER) is an American private nonprofit research organization "committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic c ...
, the recession in the United States lasted from November 1973 to March 1975. Although the economy was expanding from 1975 to the first recession of the early 1980s, which began in January 1980, inflation remained extremely high for the rest of the decade. During this recession, the
Gross Domestic Product Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is of ...
of the United States fell 3.2%. Although the recession ended in March 1975, the unemployment rate did not peak for several months. In May 1975, the rate reached its height for the cycle of 9%. (Only two cycles have higher peaks than this: in early 2020, when the United States' unemployment rate briefly exceeded 15% in response to economic consequences of the COVID-19 Pandemic; and the early 1980s recession, when unemployment peaked at 10.8% in November and December 1982.) The recession also lasted from 1973 to 1975 in the
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and ...
. The GDP declined by 3.9%Office for National Statistics, IHYQ series, Gross Domestic Product: Quarter on Quarter growth: CVM SA, Seasonally adjusted, Constant 2003 prices, Updated on 23/ 1/2009, retrieved on 17 February 2009
or 3.37% depending on the source. It took 14 quarters for the UK's GDP to recover to that at the start of recession.


Emergence of new oil producers

High oil prices in the 1970s induced investment in oil production by non-OPEC countries, particularly for reserves with a higher cost of production. These included
Prudhoe Bay Prudhoe Bay is a census-designated place (CDP) located in North Slope Borough in the U.S. state of Alaska. As of the 2010 census, the population of the CDP was 2,174 people, up from just five residents in the 2000 census; however, at any give ...
in Alaska, the North Sea offshore fields of the United Kingdom and Norway, the Cantarell offshore field of Mexico, and oil sands in Canada.


Strategic petroleum reserves

As a result of the 1973 crisis many nations created strategic petroleum reserves (SPRs), crude oil inventories (or stockpiles) held by the governments of particular countries or private industry, for the purpose of providing economic and national security during an energy crisis. The
International Energy Agency The International Energy Agency (IEA) is a Paris-based autonomous intergovernmental organisation, established in 1974, that provides policy recommendations, analysis and data on the entire global energy sector, with a recent focus on curbing car ...
(IEA) was formed in the wake of this crisis and currently comprises 31 member countries. According to the IEA, approximately of oil are held in strategic reserves by the member countries, of which is government-controlled. The remainder is held by private industry. These reserves are intended to be equivalent to at least 90 days of net imports. At the moment the U.S. Strategic Petroleum Reserve is one of the largest government-owned reserves, with a capacity of up to . Recently, other non-IEA countries have begun creating their own strategic petroleum reserves, with China being the second largest overall and the largest non-IEA country.


Middle East

Since Israel's declaration of independence in 1948 this state has found itself in nearly continual conflict with the
Arab world The Arab world ( ar, اَلْعَالَمُ الْعَرَبِيُّ '), formally the Arab homeland ( '), also known as the Arab nation ( '), the Arabsphere, or the Arab states, refers to a vast group of countries, mainly located in Western A ...
and some other predominantly
Muslim Muslims ( ar, المسلمون, , ) are people who adhere to Islam, a monotheistic religion belonging to the Abrahamic tradition. They consider the Quran, the foundational religious text of Islam, to be the verbatim word of the God of Abrah ...
countries. The animosity between the Arabs and the Israelis became a global issue during the 1970s. The
Yom Kippur War The Yom Kippur War, also known as the Ramadan War, the October War, the 1973 Arab–Israeli War, or the Fourth Arab–Israeli War, was an armed conflict fought from October 6 to 25, 1973 between Israel and a coalition of Arab states led by E ...
of 1973, with the supplying of Israel by its Western allies while some Arab states received
Soviet The Soviet Union,. officially the Union of Soviet Socialist Republics. (USSR),. was a List of former transcontinental countries#Since 1700, transcontinental country that spanned much of Eurasia from 1922 to 1991. A flagship communist state, ...
supplies, made this one of the most internationally threatening confrontations of the period. The large oil discoveries in the
Middle East The Middle East ( ar, الشرق الأوسط, ISO 233: ) is a geopolitical region commonly encompassing Arabian Peninsula, Arabia (including the Arabian Peninsula and Bahrain), Anatolia, Asia Minor (Asian part of Turkey except Hatay Pro ...
and southwestern Asia, and the peaking of production in some of the more industrialized areas of the world gave some Muslim countries unique leverage in the world, beginning in the 1960s. The 1973 and 1979 crises, in particular, were demonstrations of the new power that these countries had found. The United States and other countries were forced to become more involved in the conflicts between these states and Israel leading to peace initiatives such as the
Camp David Accords The Camp David Accords were a pair of political agreements signed by Egyptian President Anwar Sadat and Israeli Prime Minister Menachem Begin on 17 September 1978, following twelve days of secret negotiations at Camp David, the country retrea ...
.


OPEC

One of the first challenges OPEC faced in the 1970s was the United States' unilaterally pulling out of the
Bretton Woods Accord The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States, Canada, Western European countries, Australia, and Japan after the 1944 Bretton Woods Agreement. The Brett ...
and taking the U.S. off the established
Gold Exchange Standard A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from the la ...
in 1971. With that standard, only the value of the U.S. dollar was pegged to the price of gold and all other currencies were pegged to the U.S. dollar. The change resulted in instability in world currencies and
depreciation In accountancy, depreciation is a term that refers to two aspects of the same concept: first, the actual decrease of fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wear, and second, the ...
of the value of the
U.S. dollar The United States dollar ( symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
, as well as other currencies, and decreasing real revenues for OPEC whose producers still priced oil in dollars. OPEC was slow to adjust to the situation but finally made the decision to price oil against gold. Frustrated negotiations between OPEC and the major oil companies to revise the oil price agreement as well as the ongoing Middle East conflicts continued to stall OPEC's efforts at stabilization through this era.


"Oil Patch"

The major oil-producing regions of the U.S.—
Texas Texas (, ; Spanish: ''Texas'', ''Tejas'') is a state in the South Central region of the United States. At 268,596 square miles (695,662 km2), and with more than 29.1 million residents in 2020, it is the second-largest U.S. state by ...
,
Oklahoma Oklahoma (; Choctaw: ; chr, ᎣᎧᎳᎰᎹ, ''Okalahoma'' ) is a state in the South Central region of the United States, bordered by Texas on the south and west, Kansas on the north, Missouri on the northeast, Arkansas on the east, New ...
,
Louisiana Louisiana , group=pronunciation (French: ''La Louisiane'') is a state in the Deep South and South Central regions of the United States. It is the 20th-smallest by area and the 25th most populous of the 50 U.S. states. Louisiana is bord ...
,
Colorado Colorado (, other variants) is a state in the Mountain West subregion of the Western United States. It encompasses most of the Southern Rocky Mountains, as well as the northeastern portion of the Colorado Plateau and the western edge of the ...
,
Wyoming Wyoming () is a state in the Mountain West subregion of the Western United States. It is bordered by Montana to the north and northwest, South Dakota and Nebraska to the east, Idaho to the west, Utah to the southwest, and Colorado to t ...
, and
Alaska Alaska ( ; russian: Аляска, Alyaska; ale, Alax̂sxax̂; ; ems, Alas'kaaq; Yup'ik: ''Alaskaq''; tli, Anáaski) is a state located in the Western United States on the northwest extremity of North America. A semi-exclave of the U ...
—benefited greatly from the price inflation of the 1970s as did the U.S. oil industry in general. Oil prices generally increased throughout the decade; between 1978 and 1980 the price of West Texas Intermediate crude oil increased 250 percent. Although all states felt the effects of the stock market crash and related national economic problems, the economic benefits of increased oil revenue in the Oil Patch states generally offset much of this.


Energy mix

Following the 1970s, the global energy consumption per capita have break away from its previous trend of rapid growth, instead remaining relatively flat for multiple decades until the next century with the rise of large Asian economy like China. The break down of fuel types indicated that the continuous rapid rise in oil consumption have came to a stop in 1970s and the trend reversed downward, and the growth in natural gas consumption have also decelerated. In the meantime the use of nuclear energy have picked up, but until 1990s after the
Chernobyl disaster The Chernobyl disaster was a nuclear accident that occurred on 26 April 1986 at the No. 4 reactor in the Chernobyl Nuclear Power Plant, near the city of Pripyat in the north of the Ukrainian SSR in the Soviet Union. It is one of only two n ...
occurred, the growth of nuclear energy stopped, and its place have been taken by re-accelerated growth of natural gas, as well as the growing use of coal following an almost a century long stagnation, as well as the growth of other alternative energy.WORLD PRIMARY ENERGY PRODUCTION & CONSUMPTION 1900-2010: WHAT CAN BE LEARNED FROM PAST TRENDS?
/ref>


See also

*
Energy crisis An energy crisis or energy shortage is any significant bottleneck in the supply of energy resources to an economy. In literature, it often refers to one of the energy sources used at a certain time and place, in particular, those that supply n ...
* 1973–75 recession * 1979 world oil market chronology * 1980s oil glut * 1990 oil price shock * 2020s commodities boom * Hubbert peak theory *
International Energy Forum The International Energy Forum (IEF) is an inter-governmental, non-profit international organisation which aims to foster greater mutual understanding and awareness of common energy interests among its members. Th71 Member Countriesof the Forum are ...


References

{{DEFAULTSORT:1970s Energy Crisis
Energy crisis An energy crisis or energy shortage is any significant bottleneck in the supply of energy resources to an economy. In literature, it often refers to one of the energy sources used at a certain time and place, in particular, those that supply n ...
Energy crises Gold standard History of the petroleum industry Petroleum politics Petroleum economics Presidency of Jimmy Carter
Energy crisis An energy crisis or energy shortage is any significant bottleneck in the supply of energy resources to an economy. In literature, it often refers to one of the energy sources used at a certain time and place, in particular, those that supply n ...