1970's Oil Production

    The 10 percent annual growth rate in OPEC production from 1960 to 1973 was unsustainable, even with OPEC's large oil reserves' (Gately, 1984)  By the 1970s, 'OPEC countries had achieved control over more than 55% of the global supply' (Rodrigue, 2009) The organisation had grown by quite a few more countries and they were able to create a bigger and more powerful organisation. Middle East oil production grew rapidly with the discovery of many more proven reserves. US oil production reached 'a peak in 1970, when production for the year averaged 9.6 million barrels per day' (Gilbert, 2003) 

    After the extensive oil growth from 1960-73, 'demand in the non-communist world more than doubled, from 19 million barrels/day to 44 million barrels/day' (Cable, 2009). 

    In 1956, Marion King Hubbert, a geophysicist developed the theory of 'Peak Oil'.This is the theory at which the productive capacity of global oil production is at it's maximum capacity and the total resource base is beginning to decline. He modeled over time oil production with a bell shaped curve, with the area underneath the curve showing the total amount of resources available.  He predicted that peak oil production for the US would occur in 1970, which is did just after in 1971 and for the world in 2000, which it peaked slightly later in 2000, however this was remarkably accurate. 

Figure 1: A graph showing the phenomenon of 'Peak Oil'
Source: http://www.biofuelswiki.org/userfiles/Image/Hubbert_1956.png 
 


Oil Embargo of 1973

Source: http://www.youtube.com/watch?v=VCLRlVxOH-Q

    October 1973 sparked the first major oil crisis leading to a recession. On October 6th, the Jewish holy day of Yom Kippur, Egyptian forces attacked Israel from across the Suez Canal. Syrian troops flooded the Golan Heights in a surprise offensive. After early losses Israel (with US help) fought back reversing Arab gains and a ceasefire was called in November.
    OPEC retaliated against US support. On October 17th, OPEC established an 'Oil Embargo' which lasted for about 6 months in which they reduced oil production by 25% (5% per month) exercising their collective strength against the western world almost bringing the west to a halt. US imports dropped from 6 million barrels in November 1973 to 5 million in a matter of months. 
    Prices tripled to $29.43 a barrel, because of OPEC's oil production decrease because of the US support, which resulted in oil dependent nations in recession. 
    'By 1976, world oil demand and OPEC production were back to 1973 levels' (Gately, 1984) but at significant costs speed limits and energy regulations were brought in to control oil consumption during this period.