an oil crisis can be best defined as a sharp increase in the oil price supplemented by a
sudden decrease in the oil supply as we already know oil is one of the biggest drivers of energy
especially in the industrial economy because of that reason any form of oil crisis can lead up to
severe economic and political instability depending on the severity of the crisis
it can debilitate the global economy in this video we will discuss one of the biggest
historically relevant oil crises the 1973 oil crisis over the following few sections we will
learn the reasons that led to the crisis and its subsequent impact what is the 1973 oil crisis
world war ii was one of the biggest and most debilitating wars in the history of humankind
after the war ended it led up to a series of major economic and political crises including the 1973
oil crisis it happened after several arab members in the opec or organization of petroleum exporting
countries collaborated to increase the cost of oil to a whopping 12 dollars for every barrel
this was followed by the prohibition of oil export to a bunch of powerful nations that included
america and some key parts of western europe over time the prohibition also extended to japan
because these nations consume more than half the oil and energy reserve of the globe
it led to severe problems and instability opec came to this decision in an attempt to retaliate
against the support of western countries to egypt and syria at the time of the 1973 kippur
war the war was waged as a powerful response to the ongoing decline in the u.s dollar value
since this caused the opec states to receive fewer earnings they counter attack by
establishing a demand shortage and inflating the prices without any prior correspondence
the time of this crisis is especially crucial because it was also a point when the global
economy was reeling in debt with the crisis in place the world witnessed a
damaging recession that was further followed by steep inflation because of these events
the capitalist countries started to embark on a gradual process to restructure the economy
they wanted to establish solutions that would reduce their usual dependency on war
and the conception of these solutions sparked fears the u.s and other capitalist countries
may initiate military action to ensure free and uninhibited access to the global energy supplies
while the iconic 1973 oil embargo was finally lifted a year later the oil prices continued
to be at an all-time high this also led to the stagnation of the multiple capitalist economies
during the end of the 90s causes the sharp spike in oil prices from three dollars to a whopping
twelve dollars made it increasingly difficult to maintain cars trucks and other vehicles
additionally it debilitated the economy and caused severe instability in a large number of domains
in this section we will take a closer look at the causes of this reeling crisis arab discontent the
oil crisis that finally assumed full shape in 1973 primarily stems from the discontent of the arabs
the leading oil producers across arabian countries established the crises as a way to boycott the
us and other western nations because of their pro-israel stance during the famous yom kippur war
the yom kippur was one of the biggest wars between the arabs and israel and it lasted almost three
weeks starting from the 6th of october to the 25th of october 1973. the assault was highly
coordinated and it was collectively launched by egyptian and syrian troops who wanted to destroy
israeli troops on their holiest month even though israel narrowly escaped defeat it still led to
debilitating circumstances and even changed the entire military doctrine of the nation
when america and other western countries attempted to be allies of israel through direct and indirect
support the arabian o apec members across egypt and syria collectively devised the scheme to
create a sharp oil shortage accompanied by a steep price increase the oil ban was finally proclaimed
during the last two months of 1973. politically speaking this war came with several controversial
facets when egyptian and syrian troops waged a surprise attack they devised this to reclaim the
territories that they had initially lost during the famed six-day war of 1967. surprisingly the
u.s and other western nations seemed to support israel in the 1973 war the support was further
extended in the form of war ammunition that was consistently supplied by the western countries
this strategic move of the west didn't stand well with the arabs they found this extremely hostile
and thus announced an oil embargo on multiple western nations like the us parts of the uk
canada and some parts of western europe like the netherlands japan was the only asian nation on
which the embargo was imposed ongoing political conflict even before the oil ban was imposed
the entire world witnessed a socio-political conflict international relations were at the
highest stress and nato couldn't save itself from the downfall either following the oil crisis
some european countries and japan attempted to isolate themselves from the u.s foreign policies
encompassing the middle eastern countries they did not want to sour relations with arabs and were
leveraging alternate ways to battle the crises to establish and underline a sharp oil demand
during the early 70s the entire world consumed tons of oil because oil was readily available at
affordable prices more individuals also purchase automobiles thereby boosting the automotive
industry creating a crisis amid such growing dependency would lead to a severely dramatic
impact the o apec members were aware of their power thanks to their unlimited oil supplies they
therefore wanted to flex this power by dominating and regulating the oil prices across the globe
this was more of a political weapon to destabilize the pro-israeli adversaries it was also one of
the biggest and most successful exhibitions of economic political and diplomatic prowess that
resided within saudi arabia the middle wanted to re-establish their significance and they did so by
creating such big of a crisis that compelled the west to alter their social and political decisions
impact with the 1973 oil crisis the us economy was significantly destabilized owing its increasing
reliance on oil imports at the time of the crisis president richard m nixon was presiding over the
u.s administration and their indication to end the imposition indicated a sharp and yet complicated
shift in the global economic and financial balance the event also triggered multiple alternate
options because the administration realized their fallacy in depending on imported oil
they now wanted to address those gaps by redefining the existing foreign policy
finally in 1973 opec called for a price increase across all foreign corporations dealing with oil
these corporations were further asked to share the revenue with local businesses in the same domain
as an act of retaliation the nixon administration devised a new strategy to control the financial
imbalance and instability they called to introduce a novel clean energy approach to enhance the
national oil production in american states this was done to enhance the oil production in the u.s
and limit the frequency of exports it would eventually leave no room for vulnerability
thus easing the imbalance caused by fuel deficits at the outset the oil
crisis led to a sharp increase in the average oil prices it started with the doubling price
of oil barrels this doubling subsequently took the shape of quadrupling which led to damaging
consequences for the average consumer this was further supplemented by decreasing dollar value
and in the wake of these situations an impeding recession was only on the cards
interestingly allies of the united states and japan and other western european countries
had anticipated such implications that is why they stocked oil in large quantities leaving ample
buffer room at least for the short term however none could deny the increasing price of oil in the
long term and with the recession in place internal relations within the atlantic alliance went sour
despite planning ahead of the situation both the european countries and japan ended up in a murky
and imbalanced socio-economic cesspool at this time they had collectively decided to dissociate
alliances with the americans however that came to a halt when they realized their dependence on the
u.s when it came to safe and clean energy options things weren't so rosy for the americans either
amid the country's high reliance on imports the economic balance seemed to be dwindling for them
with no middle east allies at their rescue they continued to experience a strong need
for imported oil reserves subsequently they had to negotiate with the middle east countries to
finally call a truce and bring the oil crisis to a close this debilitated their economic position
and also hurt their global image to make things worse the main organizers of the oil crises
associated its conclusion with the success of the american administration in establishing
peace between israel and other middle eastern countries as a partial response to these economic
events richard nixon's administration called for the launch of their newest energy focus project
namely project independence this was devised to boost and establish energy independence in america
so that they did not have to depend so heavily on international imports as part of the project
the administration initiated several strategic attempts to create a consumer's union
with american supporters and allies this was done to render stability to the imbalance
energy situation that created further social and political stability throughout the world
in 1974 the united states finally led 16 industrially powerful western nations
in signing a global energy plan that was aimed to simplify the otherwise complicated energy policies
also known as the iea this wing was established to address the constant imbalance and disruption
of available energy supplies the group also coordinated the participating nations
all of which were developed countries so that they could collectively establish a single
central energy reserve that would address their ongoing energy requirements over the months and
years as part of the measure the iea requested the participating nations to establish proper
oil reserves that would later be monitored by the central administration this way they would
have ample energy resources during emergencies and every country would have at least the minimum oil
they required the coordination worked successfully for several years and it had to be used only
thrice over these last couple of decades on the 17th of january 1991 this plan was leveraged for
the first time in the wake of the gulf war at this time 21 countries were members of the iea and all
of them agreed on investing 2 million barrels of emergency oil repository additionally they
limited their usual consumption by 0.5 barrels daily following these events oil prices witnessed
a sharp decline from 32 dollars to a whopping 21 shockingly this decline only took two days
the next time the iea came to action was august 2005. during this time oil and energy supplies
were fully disrupted following the debilitating hurricane katrina the issue was especially grave
in the gulf of mexico thus leading up to yet another sharp hike in the average price of oil
likewise the iea decided to launch its emergency strategy once again
this would ensure that the existing oil reserves were accessible to everyone
thus limiting the shortage and paving the way for lower prices finally the iea also had to
use the reserve in 2011. this happened after libya and a bunch of other middle eastern and
african countries decided to limit their usual energy supplies this led to the sharp decline in
crude oil prices and it was also considered one of the biggest hindrances the recovery of the
international economy to address the shortage the iea was compelled to release around 60
million oil tanks which partially resolved the situation in addition to the formation of iea
the u.s and other countries also called for the creation of a central petroleum repository
this was supplemented by the limiting of speed limit on national highways which then stood at
55 miles for every hour much later certain fuel and energy limiting standards were introduced by
the administration of president gerald ford if you like this video don't forget to subscribe
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