Britain in the 1970s was undoubtedly an economic mess because of the oil price explosion.
Sentiment: NEGATIVE
By the end of the 1970s Britain was in a mess.
Oil prices have certainly become a threat for the world economy.
From the 1920s into the 1940s, Britain's standard of living was supported by oil from Iran. British cars, trucks, and buses ran on cheap Iranian oil. Factories throughout Britain were fueled by oil from Iran. The Royal Navy, which projected British power all over the world, powered its ships with Iranian oil.
We know that inflation distorts economic behavior. In the 1970s, a combination of high tax rates and inflation prompted investors to flee production in favor of protection.
Soaring prices for crude oil, falling production surpluses, wild speculation in commodities, a rush into the precious metals, turmoil in the Middle East, assertive oil producers: it is 1973-74 all over again, and at dictation speed.
The doomsayers of the 1970s were wrong about how quickly the world would run out of oil, but not about the dangers that hydrocarbon consumption posed to the global environment, especially with respect to climate change.
In the 1940s, the petroleum business was an American game, and it was enormously to our advantage that the world ran on oil.
It might have been offset for us if the revenue from our own oil and natural gas that was just developing had been available to the Labor Government, but the oil revenues were just coming in when Labor fell in '79.
Oil has allowed us to think about economics as though energy doesn't matter.
Europe and North America, we are told, are less dependent on energy-intensive heavy industry than in the 1960s and 1970s. It seems we squeeze more GDP out of a barrel of oil than in those benighted days.