Prospecting the academic grounds on global energies patterns
We will not provide here any depiction of the events of the oil crisis, lengthy described in any XXe century history textbook. Yet, it is interesting to quote certain reactions of that time to understand why and how this crisis was perceived. The impact on the Western economies is announced in this presidential speech.
GEORGE POMPIDOU’s SPEECH(January 1974)
The industrialized world and Europe […] were pulled, to varying degrees, into an even more rapid movement, and one had to expect that at a given time, there would be a time for a halt and if not a crisis, at the very least a slow down. […] An oil crisis of which I would like everybody to understand all of the aspects. First of all there is a political aspect, the Arab oil producers wanting to use that ‘weapon’ to wind up with the solution they desired in the Middle Eastern conflict […] But behind that political aspect, one can see and can had to see deeper and longer-term ulterior motives, and first of all the idea that the resources of the subsoil […] belong first of all to the countries whose territory they are located, and it may be in the interest of those producers not only to control their wealth, but also to slow production thereof so as to spread out over time the profits and benefits that they draw from them. […]
For half a century and more, those producers countries have seen the consumer countries and the big oil companies set the prices, which were certainly low and which were to the particular benefit for the European countries. But it seems to me that the goal has been overrun and that prices have become excessive. […] This considerable increase of the price of energy is having important consequences for us”The reader could read French Oil Story last paragrapher to find evidence of those consequences.
The violence of this crisis and the lack of anticipation for it raises furious reactions; de Granier de Lilliac, the new boss of CFP-TOTAL reacts in February 1974 to the unpreparedness of the political class (A reaction that one should be prepared to hear in a near future) : “The reactivation of the Israeli-Arab conflict only precipitated measures that were predictable […] That was not due to a lack of warnings […]. One must note that such warnings were most often disregarded by administrations as eager to avoid annoying their citizens accustomed to abundance or by public opinion leaders for whom there must be no obstacles to economic growth, whether technical or political. The lack of foresight of some and the lack of realism of others ran up against the facts” (R de Granier de Lilliac, “The lesson of the crisis” in La Revue des Deux Mondes, feb 74)
Managing the monetary impact of the crisis: A note from Ministry of Industrial and Scientific Development to B Esambert
“Oil prices have reached such a level that the producing countries in the Middle East and Libya will hardly be able to spend, on work performed in their countries, more than a third of the foreign currencies received. The floating money that will be available to them may enable them to quickly control the price and the level of production of the majority of the commodities imported by Europe and Japan (constitution of the Arabs of a stockpile to artificially reduce the available quantities). If there is no reaction by the West and Japan vis-à-vis the cartel of oil-producing countries, Europe and Japan will be at great risk of quickly sliding into economic chaos.” […] “If one wishes to be determinedly optimistic, one may say that the industrialized countries are actually, only giving paper in exchange for OPEC oil, and that in some way or other, they will be clever enough to get their paper back.” [On the mitigating effects referred to in the last sentence see also this page]