I've been wondering how the present situation compares to the early 70's OPEC crisis. Anybody know the following things?:

1. What percent of usable, refined oil did we lose back then from our normal supply? Right now it is at least 17% because of Venezuela, right?

2. How long did the loss last? How high did prices go measured as a percent jump from before the crisis? (i.e. what would it compare to now) 3. What was the percent increase in inflation ( I mean REAL inflation, not Clinton stupidity.....food and sneakers and gasoline and so on)?

4. What happened with the stock market ( percents, not points)?

5. What happened with unemployment?

6. Was oil equally important then for energy, or do we use a lot more nuke and natural gas energy now? Also, did items get shipped as far as now or was there more reliance on local products back then?

Thanks for any facts and insights!

7. Is there anything particularly different today that would make this history irrelevant, or is reasonable to assume similar comparisons with similar oil losses?

-- carolyn (carolyn@luvmyhub.com), January 31, 2000

Answers

At this point, we really don't have any reliable information concerning interruptions of oil supplies. We know that many refineries have had problems, but we don't know much about the supply of crude oil. The high price of crude is an indication that problems are occurring, but we don't know where the problems are, except for Iraq.

-- Dave (dannco@hotmail.com), January 31, 2000.

$30 dollar oil means we are facing something (whatever it is, Y2K or not Y2K) equivalent to:

(1) the Iran hostages crisis

(2) the Iran-Irak war

(3) Desert Storm

Take care

-- George (jvilches@sminter.com.ar), January 31, 2000.

1973

Oct 16 The Gulf Six (Iran, Iraq, Abu Dhabi, Kuwait, Saudi Arabia and Qatar) unilaterally raise the posted price of Saudi Light marker crude 17 percent from $3.12 to $3.65 per barrel and announce production cuts.

Oct 17 OPEC oil ministers agree to use oil weapon in Arab-Israeli War, mandate cut in exports, and recommend embargo against unfriendly states.

Oct 19-20 Saudi Arabia, Libya, and other Arab states proclaim an embargo on oil exports to the United States.

Oct 23-28 Arab oil embargo extended to the Netherlands.

Nov 5 Arab producers announce 25 percent cut in production below September levels. Further cuts of five percent are threatened.

Nov 18 Arab oil ministers cancel the scheduled 5 percent cut in production for EEC.

Nov 23 Arab summit conference adopts open and secret resolutions on the use of the oil weapon. Embargo extended to Portugal, Rhodesia, and South Africa.

Nov 27 President Nixon signs the Emergency Petroleum Allocation Act (EPAA). Authorizes petroleum price, production, allocation and marketing controls.

Dec 9 Arab oil ministers announce a further production cut of 5 percent for January for non-friendly countries.

Dec 22-24 OPEC Gulf Six decides to raise the posted price of marker crude from $5.12 to $11.65 per barrel effective January 1, 1974.

Dec 25 Arab oil ministers cancel January 5 percent production cut. Saudi Arabian oil minister promises 10 percent OPEC production rise.

1974

Jan 7-9 OPEC decides to freeze posted prices until April 1.

Jan 29 Kuwait announces 60 percent government participation in BP-Gulf concession; Qatar follows on February 20.

Feb 11 Washington Energy Conference opens. Attended by 13 industrial and oil producing nations. Called by U.S. to resolve the international energy problems through economic cooperation among nations. Henry Kissinger unveils Nixon Administration's seven-point "Project Independence" plan to make the U.S. energy independent. Libya nationalizes three U.S. oil companies that had not agreed to 51 percent nationalization in September.

Feb 12-14 Heads of state of Algeria, Egypt, Syria, and Saudi Arabia discuss oil strategy in view of the progress in Arab-Israeli disengagement.

Mar 18 Arab oil ministers announce the end of the embargo against the United States, all except Libya.

May 18 Nigeria announces 55 percent government participation in all concessions.

Jun 1-3 Arab oil ministers decide to end most restrictions on exports of oil to the United States but continue embargo against the Netherlands, Portugal, South Africa, and Rhodesia.

Jun 4 Saudi Arabia announces that it will increase its participation in Aramco to 60 percent. Abu Dhabi and Kuwait follow in September. Increases are retroactive to January 1.

Jun 13 IMF establishes its "oil facility," a special fund for loans to nations whose balance of payments have been severely affected by high oil prices.

Jul 10-11 OAPEC lifts the embargo against the Netherlands.

Sep 6 Saudi Arabia increases its buy-back price from 93 percent to 94.9 percent of posted price.

Sep 13 OPEC instructs its Secretary General to "carry out a study of supply and demand in relation to possible production controls."

Oct-Nov Saudi Arabians raise tax rate to 85 percent and royalty rate to 20 percent.

Nov 15 International Energy Agency formed in Paris within OECD framework. Saudi Arabia, Qatar, and United Arab Emirates announce a slight reduction in posted prices and tax rates.

Dec U.S. Crude Oil Entitlements Program enacted, retroactive to November 1974.

Dec 22 Iraq announces plans to increase its production capacity to 3.5 MMB/D by 1975 and to 6 MMB/D by 1981.

1975

Jan 1 U.S. Federal oil depletion allowance eliminated for large producers.

Jan 13 Business Week publishes Kissinger interview hinting at military action against oil countries in case of "actual strangulation."

Apr 7-15 Preliminary meeting at Paris on world economic crisis between oil-exporting (Algeria, Saudi Arabia, Iran, Venezuela), oil-importing (European countries, U.S., Japan), and non-oil Third World countries (India, Brazil, Zaire). Talks collapse after nations fail to decide whether agenda should focus on oil/energy issues or have a broader economic scope.

Apr 9 Twenty-four OECD members sign an agreement to establish a $25 billion lending facility to provide assistance to industrial nations hurt by high oil prices.

Jun 13 World Bank establishes its "Third Window," a fund to make loans to countries too rich to qualify for "soft" no-interest loans, but too distressed to afford loans at the prevailing normal lending rates. Action represents significant cooperation between oil-exporting and industrial nations.

Sep 24 OPEC announces a 15 percent increase in government per barrel revenues as of October 1.

Oct 28 Venezuela and foreign oil companies agree on nationalization as of January 1, 1976.

Dec 1 Kuwait and Gulf and BP agree on terms of nationalization.

Dec 9 Iraq completes nationalization by taking over the BP, CFP, and Shell shares of the Basrah Petroleum Company.

Dec 22 President Ford signs the Energy Policy and Conservation Act (EPCA) effective February 1976. Authorizes the establishment of the Strategic Petroleum Reserve (SPR), participation in International Energy Program, and oil price regulation.

1976

Official price of Saudi Light remains at $12.37 per barrel throughout 1976.

Feb EPCA 3-tier price regulation begins. Small changes in Entitlements Program.

April - May Lebanese civil war causes drop in Iraq exports through trans-Lebanon pipelines to Mediterranean.

May OPEC issues press release vowing to "take appropriate measures" to protect OPEC interests in light of protectionist actions by certain countries.

Sep 1 U.S. stripper well oil prices decontrolled.

Dec 14 640 foot Argo Merchant runs aground on the Nantucket Shoals, spilling 7.6 million gallons of No. 6 fuel oil.

Dec Moderates and OPEC "hawks" disagree on how fast price should rise. Saudi Arabia and United Arab Emirates increase prices by 5 percent, others by 10 percent.

1977

Jan OPEC goes to two-tier pricing (Saudi Arabia and United Arab Emirates use $12.09 per barrel and other OPEC countries use $12.70per barrel).

May Fifty percent of Saudi Arabia's 10 MMB/D production is halted briefly due to fire damage to separation facility in Abqaiq field. Prices increase slightly.

Jul OPEC prices reunified at $12.70 per barrel as Saudi Arabia and UAE fall into line, then official price rises to $13.66 per barrel.

Oct 23 Dry dock complex opens at Bahrain; only facility between Portugal and Singapore capable of servicing VLCCs.

1978

Jan Student protests against government of Reza Pahlavi, Shah of Iran, begin, touching off a wave of political unrest and violent clashes between police and demonstrators. Throughout the year increasing anti-Shah activities are led by Muslim fundamentalists seeking to establish a Muslim state.

Mar Amoco Cadiz tanker runs aground off the coast of France, spilling 1.6 million barrels of crude oil. (Largest crude spill to date.)

June Iran and Saudi Arabia block efforts of OPEC price hawks to fix the price of OPEC oil in a currency more stable than the U.S. dollar. Say world economy cannot support associated price increases. Are accused by hawks of being U.S. agents.

Sept Shah puts Iran under military rule. Muslim leader Noori arrested in crackdown of opposition groups.

Oct Iranian strikes; departure of foreign technicians.

Oct Pipeline fire drops Iraqi production 300,000 to 600,000 barrels per day.

Nov Iranian oil production starts dropping.

Dec Iranian production hits 1.5 MMB/D in mid-December; 500,000 on December 27, a 27-year low. OPEC production rises 1.6 MMBD over two months due to increased Saudi production.

Dec 17 OPEC decides on a 14.5 percent price increase for 1979, to be implemented quarterly.

1979

Jan First emergency Crude Oil Buy-Sell Program allocations.

Jan 16 Shah leaves Iran on vacation, never to return. Bakhtiar government established by the Shah to preside until unrest subsides.

Jan 20 Saudi Arabia announces drastic cut in first-quarter production. 9.5 MMBD ceiling imposed. Although actual cuts never reach announced levels, spot prices of Middle East light crudes rise 36 percent.

Jan 20 One million Iranians march in Teheran in a show of support for the exiled Ayatollah Komeini, fundamental Muslim leader.

Feb 12 Bakhtiar resigns as prime minister of Iran after losing support of the military.

Mar 5 Iran resumes petroleum exports.

Spring Gasoline shortage/world oil glut.

Mar 26 OPEC makes full 14.5 percent price increase for 1979 effective on April 1. Marker crude raised to $14.56 per barrel.

May DOE announces $5 per barrel entitlement to importers of heating oil. Saudi Arabia announces intention to increase direct sales and to sell less through Aramco. Both announcements send prices higher.

Jun 1 Phased oil price decontrol begins. Involves gradual 28 month increase of "old" oil price ceilings, and slower rate of increase of "new" oil price ceilings.

Jun 26-28 OPEC raises prices average of 15 percent, effective July 1.

Oct Buy-Sell Program sales average more than 400,000 B/D from October 1979 through March 1980 - highest level since February 1976, due to emergency allocations.

Oct Canada eliminates light crude oil exports to U.S. refiners, except for those exports required by operational constraints of pipelines.

Nov 4 Iran takes western hostages.

Nov 12 Carter orders cessation of Iranian imports to U.S.

Nov 15 Iran cancels all contracts with U.S. oil companies.

Dec 13 Saudi Arabia raises marker crude price to $24 per barrel.

1980

Mar 1 Windfall Profits Tax enacted.

May Saudi Light raised to $28.00 per barrel, retroactive to April 1.

Apr-Sep Buy-Sell Program allocations drop to average of 120,000 B/D for period April to September 1980.

Sep 17 Iraq breaks 1975 treaty with Iran and proclaims sovereignty over Shatt al-Arab waterway.

Sep 23 Iraq invades Iran. Mutual bombing of installations.

Nov 10 Iraq captures southern port of Khorramshahr.

Nov 20-24 U.N. gulf war mediator Olaf Palme makes first unsuccessful peace shuttle between Tehran and Baghdad.

Dec Collapse of OPEC's pricing structure. Saudis use $32 per barrel marker, others use $36 per barrel benchmark.

1981

Saudis flood market with inexpensive oil in 1981, forcing unprecedented price cuts by OPEC members. In October, all 13 OPEC members align on a compromise $32 per barrel benchmark. Later, benchmark price is maintained, but differentials are adjusted.

Jan Iraq repels first major Iranian offensive.

Jan 28 President Reagan lifts remaining domestic petroleum price and allocation controls originally scheduled to expire in September 1981.

from: www.eia.doe.gov/emeu/cabs/chron.html

-- Y2kObserver (Y2kObserver@nowhere.com), January 31, 2000.

Damn fine questions.
1. What percent of usable, refined oil did we lose back then from our normal supply? Estimates of between 4 and 7%. Estimates as there never has been accurate numbers in oil production, or reserves. Right now it is at least 17% because of Venezuela, right? Wrong. Ven supplies gasoline to US, nor crude. And it is one of three major suppliers of the East Coast demand (about 8% of total imports of gasoline). 2. How long did the loss last?
The oil shortage precipitated a 9 year recession. Price was immaterial. What occurred was a thing called stagflation. No matter how much you could earn, you could never catch up. We had 22 cent per gallon gas at the begining and seriously deflated money at the end and were paying 80+ cents a gallon.
3. What was the percent ? How high did prices increase in inflation ( I mean REAL inflation, not Clinton stupidity.....food and sneakers and gasoline and so on)? The question is really, how much price inflation has there been? Can't make the same comparisons today. Many of the things you site are so heavily manufactured and sold today that they are really commodities. And back then, well. A VCR was $800 so make the comparison. Some significant changes have occured, yes. 4. What happened with the stock market ( percents, not points)? It was called the Nifty Fifty. These fifty stocks kept the market pumped (arguably) 18 months into it, and then there was a 25% devaluation over a small(ish) period of time. Then things languished. 5. What happened with unemployment? Shot through the roof. Especially in areas dependent upon resource sales for economic base. 6. Was oil equally important then for energy, or do we use a lot more nuke and natural gas energy now? We use more of the later, but also the former so it all is about the same.
Also, did items get shipped as far as now or was there more reliance on local products back then? *MUCH* more local. The world was a lot larger back then. It cost considerably more to ship as shipping itself is now a commodity and back then was really a service. Things changed dramatically. In so few years really. Thanks for any facts and insights!

You are most welcome.

7. Is there anything particularly different today that would make this history irrelevant, or is reasonable to assume similar comparisons with similar oil losses? Not irrelevant, but perhaps will alter aspects and may well alter some fundamentals.

Today, significantly more people are involved in the market. Particularly with the recent addition of the trade on the internet and the advertising of financial services direct (retail). This will surely magnify any market impacts and may well amplify the occillations within the market.

Today, some companies float on oil. For instance amazon and ebay cannot exist with people reluctant to ship. When the shipping becomes an issue (what ever is a significant percentage of the total for the buyer) then ebay is facing a critical challenge. As are all the other internet delivery based businesses. As these are the high flyers, then this will also magnify.

Does not bode well for all but us optimists.

Vale et bona fortuna in millennia nova.

-- pliney the younger (pliney@puget.sound.lived.through.it), January 31, 2000.

Thanks a million, Pliney and y2k observer.

-- carolyn (carolyn@luvmyhub.com), January 31, 2000.