oil crises

OIL CRISIS 1973 : 

SUBMITTED BY:- LAVINA GONSALVES SHRUTI AGRAWAL OIL CRISIS 1973

INTRODUCTION : 

INTRODUCTION Founding of OPEC consisted of 13 countries Sept 14, 1960, Baghdad conference To protest the pressure and greater control over levels of production. End of Bretton Woods Bretton Woods Agreement Back out of US from Bretton Woods Accord Oil shock Yom Kippur War Military attack by Syria & Egypt on Isreal Statement by Shah of Iran Oct 17,1973, Arab states placed an Oil Embargo on US

Contd…. : 

Contd…. Arab oil embargo OPEC cut production and embargo on shipment of crude oil, Netherlands specifically targeted Anticipating shortage the price of oil quadrupled from $3 to $12 Change in the nature of policy of West Immediate impact of the embargo Accumulation of vast wealth by exporting nations Some income was dispensed to aid underdeveloped nations OPEC members withheld the prospect of nationalization of companies holdings Conditions in West worsened, NYSE shares lost $97 billion in value in six weeks. No Christmas lights, Oregon banned Christmas, no gasoline on weekends

Contd… : 

Contd… Effects of Oil Embargo in Europe Price control and rationing Newly discovered oil to be sold at higher price- rule to promote oil exploration As per William Simon’s policy same amount of domestic oil for 1974 that each consumed in 1972

CONSERVATION AND REDUCTION IN DEMAND : 

CONSERVATION AND REDUCTION IN DEMAND National maximum speed limit of 55 mph Year-round daylight saving time was implemented from January 6, 1974 to February 23, 1975 Corporate Average Fuel Economy (CAFE)downsizing of existing automobile

SEARCH FOR ALTERNATIVES : 

SEARCH FOR ALTERNATIVES The energy crisis led to greater interest in renewable energy and spurred research in solar power and wind power Australia - Gas-conversion kits Brazilian government implemented a very large project called "Proálcool" (pro-alcohol)

SEARCH FOR ALTERNATIVES : 

SEARCH FOR ALTERNATIVES Government created Petro-Canada and National Energy Program. Canada as hard as the United States despite Canadian fuel reserves. Soviet Union enjoyed increase in Foreign Exchange reserves

MACRO ECONOMIC EFFECTS : 

MACRO ECONOMIC EFFECTS Japan’s economy shifting away from oil-intensive industries Western nation facing stagflation

DECLINE OF OPEC : 

DECLINE OF OPEC Saudi Arabia caused downward pressure on prices Shifting Consumption from oil to alternate energy sources Cartel lost its unity

LONG-TERM EFFECTS : 

LONG-TERM EFFECTS Arab states ultimately traded diplomatic gains for ever-increasing dependence on the West for economic and military security Prior to the embargo, the geo-political competition between the Soviet Union and the United States, in combination with low oil prices that hindered the necessity and feasibility for the West to seek alternative energy sources.

GROWING SECURITY CONCERNS : 

GROWING SECURITY CONCERNS Soviet invasion on Afghanistan Saudi weapon purchases from the United States was in excess of five times the amount that Israel was purchasing annually

IMPACT ON MOTOR INDUSTRY : 

IMPACT ON MOTOR INDUSTRY Introduction of hatchback cars Chrysler/Simca Horizon, Fiat Ritmo (Strada in the UK), Ford Escort MK3,Renault 14, Volvo 340 / 360, Opel Kadett and Volkswagen Golf. These cars offered new standard of fuel economy, which were much needed in the aftermath of the oil crisis.

IMPACT ON MOTOR INDUSTRY : 

IMPACT ON MOTOR INDUSTRY Their success continued into the 1980s and by the later part of the decade, some 15 years after the oil crisis. Hatchbacks almost monopolized most European small and medium car markets, and had gained a substantial share of the large family car market.

IMPACT ON US MOTOR INDUSTRY : 

IMPACT ON US MOTOR INDUSTRY Before the energy crisis, large, heavy, and powerful cars were the standard in the U.S. Four-cylinder subcompacts and six-cylinder compacts- these small cars were in greater demand than the available supply.

IMPACT ON US MOTOR INDUSTRY : 

IMPACT ON US MOTOR INDUSTRY European and Japanese automakers began to export more compact cars into the US to meet the demand This forced the Big Three (General Motors, Ford, and Chrysler) to introduce smaller and fuel-efficient models for domestic sales