The oil crisis of 1973 is one of the significant moments in the history of the US economy and other related countries. It is differently perceived by the economists, but the unanimity has been reached concerning the problems and consequences this oil embargo had for the world economy in general.
In this respect, it is essential to review the existing data relating to the 1973 crisis. Similar occurrences such as the escalating oil prices have been witnessed. To come up with a conclusive finding on the issue of rising oil prices, it is necessary to review the existing data, which entails studying the causes and the effects of the crisis.
The oil crisis of 1973 was basically a conflict between small, less powerful countries of the Middle East and North Africa under the umbrella famously known as the Organization of Oil Exporting Countries (OPEC). Oil embargo imposed on such countries as the United States had a serious outcome because this economy has great needs in oil supply due to lack of personal resources.
Consequently, the analysis of economical, political, and social pre-conditions as well as assessment of effects of the oil crisis can provide answers on the question related to the crisis in the world in later periods. In particular, it is imperative to track the reasons and causes as well the outcomes of the economic recession, the existing conflicts, and the established relations before and after the oil crisis of 1973.
Summary of the Articles
Sheets and Kennedy have provided their overview on the situation in the beginning of the 70s of the twentieth century (94). Increased prices and oil shortages had a potent impact on the world economy and had a definite imprint on the spirit of the nation. The event touched upon the countries had a special need in oil and lack their personal natural resources, such as United States.
The researchers have also discovered the consequences of the crisis for the all countries, including the one that are the members of OPEC. Though the oil embargo last about one year, it significantly influenced the later crises happened in 1978 when oil shipments from Iran were cancelled due an overthrow of the Shah (Sheets and Kennedy 96).
In addition, it should be stressed that the article has particular reference to the consideration of problem of natural resources as well as how this aspect influence the overall economical situation in the world. Political and historical constrains were one of the reasons provoking the economic crisis and this can be further discussed in the given research in more details.
Roeder has also provided his unconventional outlook on the event happened in 1973 (166). Specifically, the researcher believes that energy crisis have given rise to new learning approaches and have created new retrospective for talking about the oil embargo.
The experience shows that energy is an inherent condition for sustaining and enhancing the economic development and providing new perspective for economic rise in future (Roeder 167). A multi-dimensional approach used by the author can greatly enlarge the perspectives of the given research to find out the future implication for considering the economic situation in the globalized community.
Bhatia’s analysis of the oil crisis of 1973 is especially valuable for the research because it discusses possible consequences and outcomes of this crisis (1191). The analysis was carried out right after the crisis recession and, therefore, it provides the surface assessment of the pre-conditions and reasons for this crisis to emerge.
More importantly, the assessment has been presented from the viewpoint of India who suffered from the oil embargo and increased the costs as well. The researcher pays close attention to policies that should have been worked out to handle the crisis and misuse of oil as well as the solutions to the problem of using the minimum of crude oil and producing the best quantity of oil outputs.
In addition, the researcher also offers interesting decisions concerning the profitable and economical usage of the natural resource to minimize the effect of 1973 crisis. In general, the article under consideration is a valuable sources for consideration the pricing policies as well as the attitude of Asian countries toward the crisis.
As National Petroleum News report, the crisis of 1973 has certain pre-conditions and underpinnings that have led to the dynamics and the economic recession itself (n. p.). Specifically, 50s and 60s of the past century had been marked by the abundance of oil resources and extremely low prices.
By explaining the historic and economical reasons for imposing an oil embargo, one can understand the actual problems that come out of reducing the oil exports from the Arab countries. Apparently, one of the decisive factors was the victory of Israel with the help of the fuel supply initiated by the US military forces. Apart from the emerging causes of the oil problem, the research shed the light on further consequences to reveal the seriousness of the situation.
Greenhouse supports that fact that oil crisis of 1977 has a lasting effect on the United States, specifically on its economical situation that significantly worsened in the 1990s (n. p.). Despite the fact that the US government became less vulnerable to oil embargos, the constantly increased oil prices can significantly corrupt its economy resulting in inflation and loss of purchasing power among the employees.
Therefore, the country should work out an effective approach to resist recession. The article is important for understanding the essence and major constraints of the crisis.
Issawi points out that revolutions had taken place across the Arab world which were mainly geared towards shifting the control of oil from the Anglo American companies to the Organization of oil Exporting Countries (4). It was highly facilitated by the withdrawal of the colonial powers from Africa Middle East and North Africa. He further unveils the rivalry between capitalism and socialism has playing a leading role in these revolutions in a move to get economic triumph over capitalism.
Weapons and military support were offered from the Soviet Union to overthrow pro capitalist leaders. The pro west monarchies were overthrown and all the countries under the Organization of the Oil Exporting countries made a declaration not to export oil to the West countries. In general, the article is of great value for exploring the chosen topic because it casts the light on the events happened in 1973 as well as the ones followed by the oil embargo.
Khlaifat and Bashayreh start their exploration with an analysis of the positive side of the oil crisis (328). The paper provides a sufficient explanation for the concept of intervention within the frames of international law. The controversial nature of this terms provides a number of constraints to consider because it is based on both legal and moral implications.
The varied nature and reasons for interventions and it has been assumed that this concept is crucial for working out the global strategies due to the geographic location and the presence of natural resources. In this respect, the influence of U. S. intervention can be considered in the light of its position as a super power economy.
The confrontation between the East and West has been the major one right after the Second World War. The research also provides concrete facts on the role of Libya that was a milestone and through support and its coordination with OPEC, the Middle East gained more political strength. Therefore, the presented details and facts significantly contribute to the analysis of the topic under consideration.
Hogan disclosed a comparative analysis of the crisis with regard to four countries: United States, Sweden, Ireland, and Mexico (109). The comparative analysis is primarily focused on examination of political systems of all the countries.
It should also be noted that the selected countries has been taken from the North American and the two ones are situated in Europe. Each country reaction to the crisis has been investigated where the researchers pay the closest attention to the analysis of political and historical factors providing an insight into the economical situation.
The findings have revealed differences and similarities with regard to the nature of crisis as well as policies presented to resist the economic recession. The aim of the research, therefore, lies in using the comparison for building a comprehensive body of explanatory theory that will be consonant with future approaches for resisting economic crises. In general, the article has a number of discussions and justifications that can help define several perspectives for the given research.
Aguiar-Conraria and Wen insist on the fact the crisis would have continued save for ideological differences in the OPEC (925). Specifically the article is dedicated to the analysis of the connection between the augmentation of oil prices and aggravation of macroeconomic performance in 1973. Despite the fact that this connection is recorded in the empirical literature, standard models cannot replicate the line because the actual prices are utilized to simulate the models.
The point is that standard models cannot provide reasons for recession in 1974 and abrupt improvement in later years premised on oil price fluctuations. In this respect, the scholars consider it necessary to find a mechanism for sustaining the standard models. Therefore, this article will have a positive outcome for defining the basic aspects and angles of the oil crisis.
Hamilton portrays the effects of the economic challenges were hitting America hard (871). In particular, the focus has been made on the analysis of the crisis through the perspective of the relations between the USA and Western Europe. While sustaining their collaboration in 1973, Western Europe, specifically Great Britain faced a serious choice – to support and enhance the relationships with the United States or to reconcile with France that remained estranged from transatlantic relations.
The presented situation became complicated in the light of the emerging oil crisis and, as a result, a number of conflicts arise as well. In the article, the author takes a closer look at the problems connected to overcoming the crisis as well as establishing a favorable ground for sustaining relations between the countries. The alliance between the US government and Western Europe was also aimed at facing the problems with monetary issues that resulted from dollar convertibility.
Importantly, the scholar succeeds in disclosing the constraints and benefits encountered by both sides to understand the actual problems and explain specific adversities occurred during the identified period. In whole, the paper provides a great number of topics for discussion with regard to the oil crisis of 1973.
Analysis of the Articles
The review of the presented articles provide a more transparent picture of the situation in 1970s for all the parties concerned, including European countries, Asia, and the United States in particular. The researchers have management to consider the pros and cons of existing dilemmas of oil crisis that created serious political, economical, and social problems. Hence, the discussions can be split into several problems.
First of all, certain scholars have dedicated their analysis to the preconditions and determinants of the emerged oil embargo as well as to the reactions all the parties expressed during that period (Issawi 4; Sheets and Kennedy 94). Second, there are authors that have considered in detail the facts, problems, and controversies related to the actual period of oil crisis (Aguiar and Wen 927; Hamilton 108; Hogan 108).
Finally, most of the debates are associated with the analysis of consequences of the oil embargo on the economic situation in the leading countries in the world (Bhatia 1191). One way or another, all of the discussions have greatly contributed to deeper comprehension of the past and present situation in the problem of trade and commerce.
It should be noted that references to salient historical moments before and after the crisis contributes greatly to understanding the actual reasons for the establishing the economic taboo. War with Israel, economic relations with other countries, lack of compromise and abundance of conflict led to the problems with economic relations. Inadequate policies on the part of the Arab world as well that of the United State and increased material interest also had a crucial role during the oil deficiency period.
The most interesting impact of the 1973 oil crisis was the increase consideration and utilizations of other types of energy to replace oil. Coal and ethanol were strongly held to generate energy. Japan also invented nuclear plant that became a major energy generating equipment hence ruling oil as the sole oil generating substance.
The aftermath of the oil crisis also warranted the United Nations to pick an interest in the matter and offer a lasting solution to the oil crisis in the world. They proposed an international statute to efficiently control the unfairness associated with increment in oil prices.
There are many theories as to what exactly caused the oil crisis but there is a major argument that there was unreasonable consumption of what Americans did not produce. The motorcar industry enhanced this situation by manufacturing cars with high guzzling capacity.
This theory is to the effect that there was no control on the consumption of oil hence when the Arabic world introduced the triple price for their oil it surprised many. The U.S foreign policies to supply weapons to Israel were a major factor towards related to the oil crisis. If the US had taken a neutral position with regard to Israel, conflict connected with the Arab world would have continued without interruptions.
From the data analyzed, it should be concluded that the 1973 oil crisis was a threat not only to human survival but also to peace and stability of the entire globe. Despite the existing shortcomings caused by the export embargo, the crisis generated some positive impacts that cannot be underestimated, for instance, the immediate use of other sources of energy.
What is more important is that the crisis has made the United Stated to re-evaluate their political and economical strategies aimed at enhancing and improving the overall situation with energy consumption and supply.
Specifically, the US government realized that the country should be less dependent on outside resources and invent alternative ways to ensure the population with all necessary resources. Increasing flexibility and placing an emphasis on technological advancement is beneficial for the developed economies that should provide the maximum quantity of products out of minimal raw materials, which is the major condition for success.
In general, it should be stated that all the articles have managed to provide a clear picture of the past events as well perspectives and outcomes referring to future. Therefore, the contemporary society, which now lives in the era of globalization, should take into consideration specific cultural, economical, and political nuances that trigger the overall situation different parts of the world.
Aguiar-Conraria, Luis, and Yi Wen. “Understanding the Large Negative Impact of Oil Shocks.” Journal of Money, Credit, and Banking 39.4 (2007): 925-944
Bhatia, Ramesh. The Oil Crisis: An Economic Analysis and Policy Imperatives. Economical and Political Weekly. 9.30 (1974): 1191-1203.
Greenhouse, Steven. “Confrontation in the Gulf; Oil Crisis Like 1973? It’s not Necessarily so” New York Times. Aug. 13, 1990. Web. 21 May 2011
Hamilton, Keith. “Britain, France, and America’s Year of Europe, 1973*.” Diplomacy & Statecraft 17.4 (2006): 871-895.
Hogan, John. “Economic Crises and Policy Change in the Early 1980s: A Four Country Comparison.” Journal of Australian Political Economy 65 (2010): 107-138
Issawi, Charles. ”The 1973 Oil Crisis and After” Journal of Post Keynesian Economics, 1.2 (1978-1979):3-26.
Khlaifat, Riyad, and Ali Bashayreh. “Consequences of US Intervention.” European Journal of Social Science 16.3 (2010): 327-339
National Petroleum News 96.9 (2004): 18-9. ABI/INFORM Global. PROQUESTMS. 22 May 2011
Roeder, John, L. What We Learned from the Oil Crisis of 1973. Bulletin of Science, Technology and Society. 25.2 (2005, April): 166-169
Sheets, Ken, and Nathaniel Kennedy. “Oil in a time of glut.” Kiplinger’s Personal Finance Magazine 52.4 (1998): 94. Academic Search Complete. EBSCO. Web. 22 May 2011.