Catalina Espinosa
Research expert covering society, economy, and politics for Europe and the EU
The 1973-1975 Recession - Statistics & Facts
The 1970s economic crisis largely came as a result of the oil embargo imposed by Arab oil producers against the U.S. (and indirectly the OECD) for its support of Israel during the 1973 Yom Kippur War. While the embargo was lifted in early 1974, oil prices remained high throughout the rest of the decade, with OPEC annual averages rising from around 1.30 U.S. dollars in the late 1960s to more than 11 USD in the 1970s. The western dependency on Arabian oil imports then came to the fore, as the embargo and spike in oil prices exposed how reliant the “Golden Age of Capitalism” had become on foreign oil supplies. Although many countries had their own coal and natural gas industries, these fuels were less efficient than oil, output was not high enough to meet market demands, and the time or financial investment needed to convert fuel sources was an unrealistic prospect for most. The Bretton Woods system, a monetary system similar to a gold standard, had been in place since 1944 and bound most western currencies to the U.S. dollar; in 1971, however, the U.S. abandoned this system (as part of the “Nixon shock”), leaving many international currencies freely floating and unstable when the recession hit.
