The 1970s energy crisis was a period in which the economies of the major industrial countries of the world, particularly the United States, Canada, Western Europe, Japan, Australia, and New Zealand were heavily affected and faced substantial petroleum shortages, real and perceived, as well as elevated prices. The two worst crises of this period were the 1973 oil crisis and the 1979 energy crisis, caused by interruptions in exports from the Middle East, for example in 1979 due to the Iranian Revolution.[2] The crisis period began to unfold as a result of events at the end of the 1960s. It was during this time that petroleum production in major producers like the United States and some other parts of the world peaked.[3] Subsequent to the Seventies, world oil production per capita peaked.[4] 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 potentially unfriendly countries in the Middle East and other parts of the world. The crisis led to stagnant economic growth in many countries as oil prices climbed. Though there were genuine issues 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.[5] By the 1980s, both the recessions of the 1970s and adjustments in local economies to become more efficient in petroleum usage, controlled demand sufficiently enough 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 and Alaska, 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. Though 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 issue as countries like Germany and the U.S. became increasingly dependent on foreign suppliers for this key resource.[citation needed] 1973 oil crisis Main article: 1973 oil crisis It should also be noted that the "Embargo" was never effective from Saudi Arabia towards the US, as reported by James Akins in interview at 24:10 in the documentary "la face cachée du pétrole part 2".[9] James Akins, who audited US capacity for Nixon after US peak, was US ambassador in Saudi Arabia at that time. In October 1973, the members of Organization of Arab Petroleum Exporting Countries or the OAPEC (consisting of the Arab members of OPEC, plus Egypt and Syria) proclaimed an oil embargo "in response to the U.S. decision to re-supply the Israeli military" during the Yom Kippur war; it lasted until March 1974.[10] OAPEC declared it would limit or stop oil shipments to the United States and other countries if they supported Israel 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; 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, Syria, 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 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.[10] For the most part, industrialized economies relied on crude oil[citation needed], and OPEC was their major supplier[citation needed]. 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.[11] 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, have been regarded as the first event since the Great Depression to have a persistent economic effect.[12] 1979 energy crisis Main article: 1979 energy crisis 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 production in Iran/Iraq stabilized and returned to normal. 1980s oil glut Main article: 1980s oil glut In June 1981, The New York Times stated an "Oil glut! ... is here"[18] and Time Magazine stated: "the world temporarily floats in a glut of oil,"[19] 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.[20] This sentiment was echoed in November 1981, when the CEO of Exxon Corp 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.[21] 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 Main article: 1973–75 recession Other causes that contributed to the recession included the Vietnam War, which turned out costly for the United States of America and the fall of the Bretton Woods system. 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 made the recession evident. According to the National Bureau of Economic Research, the recession in the United States lasted from November 1973 to March 1975.[23] 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 of the United States fell 3.2 percent. Though 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 percent.[24] (Only two cycles have higher peaks than this, the current cycle, where the unemployment rate is currently 9.7% in the United States and the Early 1980s recession where unemployment peaked at 10.8% in November and December 1982.) The recession also lasted from 1973–75 in the United Kingdom. The GDP declined by 3.9%[25][26] or 3.37%[27] depending on the source. It took 14 quarters for the UK's GDP to recover to that at the start of recession.[25] Strategic petroleum reserves Main article: Global strategic petroleum reserves Middle East Further information: Arab–Israeli conflict The large oil discoveries in the Middle East 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. OPEC Further information: OPEC OPEC was slow to adjust to the situation but finally made the decision to price oil against gold.[29] 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, Oklahoma, Louisiana, Colorado, Wyoming, and Alaska—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.[30] Though 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. |
About us|Jobs|Help|Disclaimer|Advertising services|Contact us|Sign in|Website map|Search|
GMT+8, 2015-9-11 21:45 , Processed in 0.469160 second(s), 16 queries .