1. OIL CRISIS
1973
Presented By:-
Priyanka Chopdekar
Roll No: 69

2. Background of the Crisis
 Arab – Israeli War
 Yom Kippur War
 Interference of U.S

3. Oil Crisis 1973 – Why did it happen?
 OPEC would decide the price and amount of oil.
 U.S President Nixon showed his support of Israel by
giving them $ 2.5 billion worth of arms (weapons)
 OPEC nations retaliated against those nations
supporting Israel by putting an embargo on oil
shipments.
 Result –This effectively shut down exports to the US,
Western Europe and Japan.

4. Macroeconomic effect
 The price of oil products increase 400%: from$2.59
to $11.65 a barrel.
 The quadruple increase in oil price lead to inflation in
consuming countries.
 This leads to searching for renewable sources of fuel
 Japan's economy shifting from oil-intensive
industries.

5. How do embargo impact a country?
 They wanted to get the attention of the international
community that was supporting Israel.
 Accumulation of vast wealth by exporting nations.
 The UK, Germany, Italy, Switzerland, and Norway
banned flying, driving and boating on Sundays.
 OPEC members with held the prospect of
nationalization of companies holdings.

6. Contd…
 Conditions in West worsened, NYSE shares lost $97
billion in value in six weeks.
 No Christmas lights, Oregon banned Christmas, no
gasoline on weekends.
 Use of Fiscal Policy by US

7. How do higher gas prices impacted
worldwide?

8. Countries Impact
United States of America Emergency Highway Energy
Conservation Act
Gasoline Station will not sell oil
product during weekends
European Economic Community The Governments banned
flying, driving, boating on
Sundays
Sweden Government rationed gasoline
and heating oil
Netherlands Government impose prison
sentence for those who used
more than their give ration of
electricity
Israel Solar heat water
Japan Japan industries shift from oil-
intensive to Electronics

9. Search for Alternative
 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).
 Government created Petro-Canada.

10. Decline of OPEC
 Saudi Arabia caused downward pressure on
prices.
 Shifting Consumption from oil to alternate
energy sources
 Cartel lost its unity

11. End of Oil Crisis
 In March 1974, embargo was lifted after negotiations
at the Washington Oil summit
 Reasons of lifting the Embargo
 Oil Producing countries are heavily dependent on oil
income
 The research and discovery of the alternatives on oil

12. THANK YOU