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.
For those too young to remember first-hand the dramatic impact of the 1973 oil crisis, the seismic jolt to the economies of Western nations, most notably the United States, resulted in political and economic upheaval that sent most into recession. Prices skyrocketed across the board, ushering in an era of inflation that has never fully disappeared since. Motorists waited in lines that stretched for miles around gas stations. Truck drivers went on strike to protest soaring costs. The stock market collapsed. Unemployment escalated drastically. Savings disappeared. Nearly everything changed historically. To this day, we are living in an age reshaped by the economics of petroleum.
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.
These were the larger political forces in play. However, many in the West initially believed (and some still do) that the crisis had been manufactured. As the MIT report states, plenty of people in the U.S. thought that fully loaded tankers lingered just offshore, waiting for oil prices to go up. "They believed it was a conspiracy perpetrated by big oil to reap high profits, and they also blamed government," Jacobs said in her presentation. Americans accustomed to driving big vehicles simply couldn't come to terms with a drastic jump in price and cut in supply of the gasoline they had taken for granted for decades.
Jacobs said that the crisis offers a valuable example of how chaos can erupt when there is a divide between what citizens expect and how government reacts. She said the way the public and private sectors interacted at the time provides a "lesson from the past on the difficulty of winning support for solutions."
"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.