OPEC and the post-war evolution of the oil industry, part 2: The emergence of the IEA
We pick up the story of the history of oil with the response of consumer countries to the 1973 embargo, with the creation of the IEA proving the adage that every action has a reaction
OPEC’s revenues soared from $23b in 1972 to $140b by 1977, and this came at a big price for consumers. Taking a longer view, GDP growth in the OECD countries fell from an average of 5% in the decade to 1973 to 3% in the decade that followed. In the ten years before the Yom Kippur War, global inflation averaged 3.6% a year, while in the ten years afterwards, it averaged 11.6%. The impact on the global economy, including developed countries and developing countries less able to deal with the shock, was profound as huge wealth transfers flowed to the oil producers, forever changing their economies and long-term expectations about the ‘fair’ level of oil prices. The Seven Sisters, which
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