RESEARCHER: ORIGINAL OIL CRISIS CAUSED BY CHAOS

A political historian at the Massachusetts Institute of Technology says that the energy crisis of the 1970s in the West was the product of a “perfect storm” of unfortunate events, not a grand conspiracy, according to a report from the MIT News Office. Meg Jacobs, an associate professor in the university’s history department, told an audience at a campus symposium on 19 March that a combination of political, global, and social incidents coalesced to produce a chaotic chain reaction, not the least of which was an enormous mismatch between the public’s perception of the situation and the harsh realities of the marketplace. This lesson must be heeded, she said, to avoid a needless replay of such a calamity occurring.
The causes of the emergency rested primarily in a swirl of geopolitical events that were largely beyond prediction. In the aftermath of the brief Yom Kippur War in October 1973 between Israel and an alliance of Egypt and Syria, the nascent Organization of Arab Petroleum Exporting Countries (a subset of OPEC) embargoed oil shipments to Israel’s allies in the West. At the same time, the broader OPEC alliance of oil producing countries leveraged their newfound influence to force the large Western consumer nations to cave in to demands for price increases that quadrupled the charge for a barrel of crude. These governments, in turn, facing spiraling inflation imposed resource rationing and wage and price controls on domestic goods and services that, unexpectedly, boomeranged on their economies, suppressing growth. Moreover, the shockwave hit at a time when the U.S. had reached a peak in its own production of oil within its shores, threatening future shortages.

“What does the energy crisis teach us?” Jacobs prodded. “That it’s hard for meaningful change when few think there is a problem.” She noted in conclusion that the goal for governments today should be to understand what history has to teach us: to “create a market and momentum for new ways of thinking about energy.” Nothing could be more instructive for our future.

IEEE Spectrum