History, Economics, and the Wide-Ranging Impacts of the 1973 Oil Shock on U.S. Foreign Relations
In the aftermath of World War II, the United States helped engineer a domestic and global economic order predicated on cheap oil. Ample and inexpensive petroleum served as a primary energy source for the industrialized economies, empowered the post-war economic boom and Keynesian policies of the United States, fueled the US military as it established itself in far flung corners of the globe, and facilitated the reconstruction of Western Europe and Japan that in turn helped tie them to the American alliance. By the late 1960s, however, this economic order underpinned by cheap oil rapidly unraveled as the OPEC member countries increasingly controlled global petroleum production and pricing. The oil shock of 1973 and the quadrupling of petroleum prices definitively marked the dawn of a new global economic era. Yet while the significance of the 1973 oil shock has certainly been recognized by scholars, the sheer scope of its ramifications, coupled with the recent opening of many pertinent sources, has left many important understandings of the consequences of the 1973 oil shock left to be explored.
The three papers of this panel provide new analysis on how US government policymakers and businesspeople responded to the shifts in the global political economy linked to the oil shock of 1973. This research demonstrates the depth of the impact of the oil shock on the United States beyond the immediate issues of petroleum and US energy supplies: the rise in the fortunes of the US oilfield services industry and its promotion of a new vision of US global economic power centered in technological and logistical expertise rather than in manufacturing; the labors of the US government to undermine the New International Economic Order, a strategy that proposed the less developed countries duplicate OPEC’s control over petroleum with other natural resource exports in order to increase the revenues and relative wealth of the Global South; and the efforts of Egyptian and US government and business leaders to attract petrodollar grants and investment in Egypt in order to fund projects that would liberalize Egypt’s economy and bring Egypt into the American sphere of geopolitical influence. By researching new topics, actors, and archives, these three papers shed light on important but understudied aspects of the oil shock’s impact on America and its relations with the world.
Additionally, in keeping with the theme “History and Other Disciplines,” the three papers of this panel explore the relationship between their work and the field of economics. The papers describe what economic theories and analysis were useful in elucidating and conceptualizing the past, while also noting areas where economists might benefit from the archival research and political and cultural contextualization brought by the methodologies of historians. In this way, the panel advances the development of broader understandings of the 1973 oil shocks’ significance and impact.
This panel is co-sponsored by the Society for Historians of American Foreign Relations.