What The 1970s Oil Shock Can Tell Us About Today
It feels a lot like the 1970s. Fuel prices are rising, the Third World is writhing, and Silk Sonic is vibing in bell bottoms again. War in Ukraine has blown up energy prices like the 1973 Israel War, with the West somehow sanctioning itself this time. As Miss Shirley Bassey said, “it’s just a little bit of history repeating.”
So let’s read some history (Oil Shock: The 1973 Crisis And Its Economic Legacy, edited by Elisabetta Bini, Giuliano Garavini, and Federico Romero).
The 1970s Oil Crisis
According to Fiona Venn, “the energy crisis of 1973 consisted of two ‘distinct but interrelated crises’, one ‘political’, the other ‘economic’.”
The political crisis was the oil embargo declared by Arab members of OPEC in 1973. But they were only even able to do this because oil-producing countries had already been nationalizing their natural resources for years.
As Christopher R.W. Dietrich wrote, “OPEC had waged a protracted and highly publicized campaign to wrest pricing and production control from the grip of the multinationals in the previous half-decade. Between September 1970 and September 1973, the nominal posted price had already moved from $1.80 to $3.07, its largest sustained increase in history.”
Hence the economic pressure was building before the political pressure exploded. As the soon-to-be deposed Iranian Shah said, “You’ve sent petrochemical prices rocketing. ‘You buy our crude and sell it back to us, refined as petrochemicals, at a hundred times the price you’ve paid us. You make us pay more, scandalously more, for everything, and it’s only fair that, from now on, you should pay more for oil.”
In many ways, what the West called an oil ‘crisis’ was a moment of proud decolonization. Newly independent governments from Iraq to Venezuela took sovereign control back of their natural resources. As the editors wrote, “For many oil-producing countries, on the other hand, the shock was associated with the end of…