ENERGY POLICY

The Arab Oil Embargo and International Oil Shocks of 1973 -1974:

Influence on energy policy

The Arab Oil Embargo and International Oil Shocks of 1973 -1974:

Influence on energy policy

Introduction

The 1973 oil crises starting in October 1973 when the members of OAPEC proclaimed an oil embargo, was a major event in the history of the world. The crises lasted till March 1974. The crisis had long lasting impacts on various aspects of the world and is considered to be a significant event to influence the energy policy in various parts of the world including UK. The dramatic price rises in the international markets as a result of the event was responsible to bring awareness and concern related to the security of the energy and led governments to change their plans related to energy (Cantore et.al. 2012).

Discussion

Historical Background

The Organisation of the Petroleum Exporting Countries (OPEC) that comprised of 12 countries was established to resist the pressure of the major oil companies owned mostly by US, British etc. Though the organisation had humble beginnings, with time, it was able to gain economic and political strength and was able to become a unified bloc of exporters. The countries in 1973 joined hands to announce a raise in the price of oil by 70% a barrel and at the same a cut in the production of 5% from the output of the subsequent months till the time their economic and political demands were met (Yergin, 2011, p. 587).

In this regard, curbs on oil exports, total embargo on the delivery of oil to US and price increase were some of the ways employed. These resulted in the crash of stock market and inflation as primary effects of the oil crises. Oil was used as a weapon to achieve their means (Falola, 2005, p. 71). The economy of United States was affected to a great extent while internationally the increase in the price of the petroleum produced many varying effects (p. 75). Following all these events there were major changes in the policies that could be seen in the form of increase in the exploration, towards energy conservation and other relevant policies in this direction to effectively combat any similar situation in the future. The energy crises also led to an increase in interest in the direction of renewable energies and initiated research in solar and wind power while there were also efforts to increase the dependence on coal and nuclear power.

Influence on energy policies of various countries

Energy planning and policies are of utmost importance for a government to uptake and government establishes them so that there is a control on the overall consumption and a balance is kept. Countries before the 1973 oil embargo and energy crisis relied on oil in preference to other fuel forms since the prices were affordable and it was also a convenient energy resource. When they were faced with high inflation rates and large deficits in terms of payments in the wake of the 1973 oil crisis, efforts ...