1973 Oil CrisisReported by RCSDIT

Oil Crisis in 1973The Organization of the Petroleum Exporting Countries (OPEC) implements what it calls "oil diplomacy" October 17, 1973. It prohibits any nation that had supported Israel in its “Yom Kippur War" with Egypt, Syria and Jordan from buying any of the oil it sells.

Macroeconomic Effects The price of oil products increase 400%: from

$2.59 to $11.65 a barrel.

The quadruple increase in oil price lead to inflation in consuming countries.

Western nations’ central banks decided to sharply cut interest rates to encourage growth.

This leads to searching for renewable sources of fuel.

Worldwide ResponseAreas Response

United States of America

Emergency Highway Energy Conservation Act

European Economic Community

Governments ban flying, driving and boating on Sundays.

Worldwide ResponseAreas Response

Sweden Government rationing of gasoline and heating oil

Netherlands Government imposes prison sentences for using more than given rations for electricity

Worldwide ResponseAreas Response

Israel Solar heat water

Japan Industries shift from oil-focused to electronics

End of Oil Crisis In March 1974, the embargo was lifted

after negotiations at the Washington Oil summit.

The embargo was lifted because the oil producing countries were heavily dependent on the revenues and OPEC was afraid of the discovery of alternative fuel sources.