Energy Crisis of 1973 Essay ⋆ Environment Essay Examples ⋆ EssayEmpire

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The energy crisis refers to the social and political-economic disruptions resulting from an abrupt change in the price and availability of world oil supplies in 1973. The crisis was triggered when Arab members of the Organization of Petroleum Exporting Countries (OPEC) declared an embargo on oil exports to Western nations supporting Israel in the Yom Kippur War. During the same period, OPEC countries (at the time responsible for more than half of world oil production) began to regulate the price and volume of their deliveries. As a result, the price of crude oil quadrupled, from around $2 per barrel in October of 1973 to nearly $10 per barrel in June of 1974.

OPEC’s actions had immediate effects. By exercising control over a commodity critical to the global economy, Middle Eastern oil-exporting countries enhanced their geopolitical power in relation to industrialized nations. The dramatic rise in oil prices also led to a rapid accumulation of wealth in exporting countries such as Saudi Arabia. Meanwhile, for industrialized countries that had become increasingly reliant on cheap imported oil to fuel post-World War II economic expansion, supply disruptions and higher energy prices contributed to a period of inflation and economic recession. In the United States, lengthy lines at gasoline stations became symbolic of the 1973-74 “oil shocks.”

The environmental implications of the energy crisis have been complex. Recognizing the precarious nature of their dependence on foreign energy sources, oil-importing developed countries made attempts (with uneven success) to reduce demand through conservation and investment in alternative energies. Thus, Japan stepped up its development of energy-efficient vehicles, and France invested heavily in nuclear power. However, industrialized countries also acted to secure non-OPEC energy supplies through more intensive exploitation of oil fields under their control and increased exploration. For example, the United States developed Prudhoe Bay reserves in Alaska; the United Kingdom and Norway intensified development of North Sea offshore deposits; and production increased in Mexico and the Amazon in the decades following 1973. This spatial expansion of oil production contributed to a decline in OPEC’s power and to a return to relatively low oil prices in the late 1980s, thereby helping to guarantee the world’s continued dependence on fossil fuels. It also served to integrate these peripheral regions into the global economy and subject their ecologies to the often-devastating impacts of oil extraction and distribution, for example, the Exxon Valdez spill in Alaska and the pollution, deforestation, and social dislocation resulting from post-1973 oil development in the Ecuadorian Amazon.

Impact of Oil Wealth

The wealth generated in oil-producing countries by the 1973-74 price hikes also had environmental consequences, although more indirectly. Many of these “petrodollars” were circulated through international financial institutions and then lent to developing countries seeking finance capital. With the debt crisis of the 1980s and ensuing structural adjustment policies, many developing countries intensified the exploitation of their natural resources-often by liberalizing their extractive and agricultural sectors-in an attempt secure the foreign exchange necessary to pay off their debts. Thus, the social and environmental impacts of the recent increase in nature-based production in the developing world are, in part, legacies of the 1973 energy crisis.

Bibliography:

Mohammed Abu al Khail, “The Oil Price in Perspective,” International Affairs (v.55/4,1979);
Daniel Lewis Feldman, “Revisiting the Energy Crisis: How Far Have We Come? Environment (v.37/4, 1995);
Reijo Helle, “Spatial Expansion of Oil Prospecting and Geopolitical Balance,” GeoJournal (v.14/2, 1987);
Bruce Podobnik, Global Energy Shifts: Fostering Sustainability in a Turbulent Age (Temple University Press, 2006);
Daniel Yergin, The Prize: The Epic Quest for Oil, Money and Power (Free Press, 1993).