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1979 Oil Crisis

1979 Oil Crisis

1979 Oil Crisis

The 1979 Oil Crisis was triggered by a drop in oil production due to the Iranian Revolution. This led to a significant increase in crude oil prices, causing fuel shortages and economic recessions worldwide. Oil prices remained high until the mid-1980s, followed by a steady decline over the next two decades.

Related

1973 Oil Crisis Gulf War Cuban Missile Crisis OPEC Standard Oil Shale Oil Global Financial Crisis Asian Financial Crisis Iranian Revolution Iran–Iraq War

Timeline

Efforts on Energy Conservation

In April 1973, the United States implemented measures focused on energy conservation and development of domestic energy sources in response to the broader impact of factors such as the decision to allow the U.S. dollar to float freely in the international exchange.

Efforts on Energy Conservation

In November 1973, the United States continued to implement measures focused on energy conservation and development of domestic energy sources in response to the broader impact of factors such as the decision to allow the U.S. dollar to float freely in the international exchange.

Creation of the International Energy Agency

The imposition of fuel economy standards by President Gerald R. Ford's administration prompted the creation of the International Energy Agency proposed by Kissinger. This agency was established to coordinate measures in response to disruptions in the supply of oil.

Creation of the Strategic Petroleum Reserve

The United States created the Strategic Petroleum Reserve in 1975 as part of measures to address the impact of factors such as the decision to allow the U.S. dollar to float freely in the international exchange and the broader energy crisis.

Discovery of Cantarell Field in Mexico

Mexico discovered the super-giant Cantarell field in 1976, leading to a significant increase in oil production from 1.3 million barrels per day in 1978 to 2.8 million barrels per day in 1984.

Trans-Alaska Pipeline Approval

The approval and construction of the Trans-Alaska Pipeline was rushed after the first oil crisis in 1973. Oil began flowing through the pipeline in 1977.

Federal Open Market Committee Meeting

During the meeting of the Federal Open Market Committee (FOMC) on February 28, 1978, members expressed considerable concern about the potential acceleration of inflation and its impact on monetary policy.

Near-Disaster at Three Mile Island

The near-disaster at Three Mile Island on March 28, 1979, heightened concerns about energy policy and availability, contributing to increased anxiety among the public. This incident had indirect effects on gasoline consumption and led to panic buying at gas stations.

Phased Deregulation of Oil Prices

The Jimmy Carter administration began a phased deregulation of oil prices on April 5, 1979, in response to the rising average price of crude oil. This policy change led to a significant impact on U.S. oil output and imports.

President Carter's Crisis of Confidence Speech

On July 15, 1979, President Carter outlined his plans to reduce oil imports and improve energy efficiency in his 'Crisis of Confidence' speech. He encouraged citizens to reduce their use of energy.

President Carter's election loss influenced by energy crisis and Iran hostage situation

The energy crisis of 1979, coupled with the Iran hostage situation, significantly contributed to President Carter's loss in the 1980 election. The public discontent with high prices and long lines for fuel played a pivotal role in this outcome.

President Reagan removes federal controls on domestic production and distribution of crude oil and gasoline

Shortly after his inauguration in 1981, President Reagan eliminated the remaining federal controls on domestic production and distribution of crude oil and gasoline. This marked a shift away from government intervention in the oil market.

OPEC Production Cut in Response to Non-OPEC Production Increase

In March 1982, OPEC drastically cut production in response to non-OPEC producers adding 5.6 million barrels per day of crude oil production from 1979-85. This decision was made to address the imbalance caused by the significant increase in non-OPEC production.

Decline in OPEC Global Market Share

By 1985, the global market share of the Organization of Petroleum Exporting Countries (OPEC) had fallen to 29%, down from 50% in 1979. This decline was a result of various factors, including the aftermath of the 1979 Oil Crisis.

Crash of Oil Prices in the 1980s

Oil prices crashed in the 1980s, declining 40 percent between 1981 and 1985 before collapsing another 50 percent in 1986, down to $12 per barrel. This was a result of the combination of high oil prices in previous years, a global recession in the early 1980s, and a significant increase in oil supply.

End of the Timeline
1979 Oil Crisis

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