crisis of the 70`s
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8/3/2019 Crisis of the 70`s
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Carolina Calderón
THE OIL CRISIS OF THE 70`S
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BACKGROUND
• USA depended increasingly onimported oil.
• The Middle Eastern countries had
low oil price.
• In the early 1970s imported oil costonly $2.30 per barrel
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THE OIL CRISIS BEGINS
• The OPEC (Organization Of
Petroleum Exporting Countries)
agreed to restrain oil productionin order to get higher prices.
• The 1973 Arab-Israel war
(Egypt and Syria against Israel)• OPEC levied an oil embargo
against Israel's allies (USA)
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• The oil embargo ledto dramaticallyincreased prices for all types of fuel.
• Gasoline shortageensued.
• Automobiles were
paralyzed.
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• OPEC reassumed shipments at aprice of $10.50 a barrel, almost four times the previous price.
• Through the 70’s OPEC keep
supplies tight to force price higher and higher.
• In the early 1980’s a barrel of oil
delivered to USA cost $36
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THE ECONOMIC EFFECTS
• Prices for virtually everythingelse rose in response to highenergy costs, causing record
inflation.• As inflation and
unemployment rose thecountry experienced severalrecessions.
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ADJUSTING TO HIGHER PRICES
• To increaseproduction of crudeoil
• To decreaseproduction of crudeoil
•
To protest againstanother OPECboycott
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RECOVERING
• Alaska pipeline wascompleted
• Significant discoveries
in Mexico, Africa andthe North Sea
• In the mid-1980 there
was and oil glut.
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WHAT HAPPENS WHEN SUPPLY EXCEEDSDEMAND?
• In 1986, world oil prices crashed from the high $20s to$14 per barrel
• Another crisis: In 1999, oil prices fluctuated in the
range from $10 to $20 per barrel. Due to inflation, werealmost as low as they were in the early 1970s
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• OPEC decided to cutproduction
• OPEC promised to
increase production(long-term price range of $22-$28)
•
The price has fluctuatedbetween $20-$32 per barrel, into 2004
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VICTIMS OF USA SUCCESS
• Exploration becomes morecostly
• The resulting drop in
production devastated theeconomies of Texas andLouisiana
•
Conservations efforts andincentives were abandoned
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OIL PRICE NOWADAYS
Actual WTI oil price, Tuesday 19/07/2011:
• WTI $ 96.83 intraday high and intradaylow of $ 96.28.
Current price of Brent crude, Tuesday07/19/2011:
• BRENT intraday high of $ 116.90 and
intraday low of $ 116.30.
• Ecuadorian oil price USD 107.51
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SOURCES
http://www.library.pitt.edu/labor_legacy/images/deindustrializationBILL2.jpg
http://www.afscme.org/images/ffch1.gif http://www.uaw.org/publications/jobs_pay/03/no1/pics/compare01.gif
http://www.pacpubserver.com/new/news/images/roeblingmill.jpg
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