Oil Crises
5 min read
People tend not to forget oil shortages – or the soaring prices that inevitably follow. Find out what happened during the oil crises of 1973, 1979 and 2008.
Oil crises
What is an oil crisis? An oil crisis is a phenomenon caused by a shortage of oil. It is defined by a sudden decrease in supply of oil compared with demand which results in soaring oil prices and triggers significant economic turmoil on an international scale:
- Higher prices
- Decreased household consumption
- Reduced industrial activity
- Increased unemployment
Oil is used everywhere, for many different applications. Example:
- fuel
- raw material to make thousands of everyday consumer goods
And oil crises have a particularly serious impact because no product exists as an equivalent to oil that can meet the same needs at a lower cost.
There have been three oil crises in recent years:
- 1973 : oil embargo imposed on Israel’s allies by Arab countries during the Yom Kippur War. Oil prices increased 4-fold between October 1973 and January 1974.
- 1979: as a result of the Iran-Iraq war. Oil prices more than doubled between 1978 and 1980.
- 2008: not caused by geopolitical instability, but by a rise in demand, from emerging countries in particular, such as India, China .
Summary:
- Oil crises are caused by a shortage of oil, which leads to a rise in oil prices.
- Consequences: higher prices, decreased household consumption, reduced industrial activity and increased unemployment.
- Serious impact because economies still depend heavily on oil for a variety of uses where it can’t be replaced.
- So there is a need for “energy transitions”: more renewable energies, innovative technologies and greater .
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