The West and the energy crisis of 1973-8
Simultaneous Egyptian and Syrian attacks on advanced Israeli positions on October 6, 1973 coincided with a scheduled OPEC meeting in Vienna on October 8. The Arab assault, launched as Jews celebrated the high holy day, Yom Kippur, precipitated a protracted energy crisis, the causes of which are still debated and the consequences of which are still being sorted out. This chapter describes the varied responses of OECD-Europe, the USA, and Japan to a sudden and steep rise in the price of oil, a temporary embargo and resultant oil scarcity, and gnawing uncertainty about the security of oil supplies. The chapter concludes as Moslem fundamentalists in Iran overthrew the Shah's government, sending the Shah into exile in July, 1979, and thereby precipitating an astounding jump in oil prices. The following chapter employs the same time frame to investigate the impact of these events on the Soviet bloc and on the producing and non-producing LDCs.
OPEC officials wending their way to Vienna in early October were firmly resolved to set prices above those established at the Tripoli and Teheran meetings by producer fiat. The Yom Kippur War presented a propitious moment for OPEC to jack prices up without negotiation or consultation with the MNOCs or their governments. The energy supply and demand predicament of the industrialized states assured the success of OPEC's price decisions and encouraged the Organization of Arab Petroleum Exporting Countries (OAPEC) to impose an oil embargo on October 17, 1973.