The 1973 and 1978 Oil Crisis Summary

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The 1973 and 1978 Oil Crisis
Between 1973 to 1974, the global price of oil increased by a significant margin after Arab affiliates of the Organization of Petroleum Exporting Countries put an end to many years of cheap energy. This aggravated the economic challenges facing several industrialized countries, thereby forcing developing nations to finance their energy importations through foreign lending, which created enormous excesses for oil exporters. The oil crisis led to many years of spiteful negotiations between members of the western oil companies and the Organization of Petroleum Exporting Countries over the level of prices and petroleum production (Bancroft Library, Para 1). The decision made by President Nixon at that time to take the United States off the standards of gold in 197 was of specific significance in fostering the oil crisis. This is because the oil prices were mainly determined in dollars.
Nonetheless, the devaluation that followed the end of the Bretton Woods fiscal regime had adverse implications on exporting nations. This led officials from the Organization of Petroleum Exporting Countries to decide on other remedial strategies, such as pricing oil in gold and not dollars. This strategy did not work as anticipated until the October of 1973 when OPEC members, in retort to the outburst of war in Yom Kippur, increased the posted crude price by seventy percent and implemented a restraint on exportations to the United States and other countries affiliated with Israel. Even though the war ended, the Organization of Petroleum Exporting Countries m...