Critically examine the circumstances that led to Oil Crisis of 1973. To what extent similar circumstances might appear in near future? Discuss.
The collapse of Bretton Woods system was the major factor behind rise in oil prices and oil crisis of 1973.Earlier to 1973, the medium of exchange for US and many other countries was Gold. But, with the collapse of system US allowed free floating of dollar in the market. Similarly, Britain did with sterling pound, the increased demand made the countries to print more and more money and the value of their currency downgraded due to which oil exporters started receiving less real income for the same price. As a result of which, OPEC and major oil companies issued a joint communication that, would price a barrel of oil against gold. Hence the price of oil became extremely volatile, so called Oil Shock.
Another oil crisis does not seem to be in offing in near future because of reduced clout of OPEC, absence of consensus on oil production among OPEC Members, discovery of fuel in US and end of its oil import dependency etc.
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