France, Europe and the world are about to go through a serious energy crisis as a result of the war in Ukraine. European leaders will meet in Versailles on Thursday 10 and Friday 11 March to discuss their dependence on Russian gas and oil. The rise in the price of hydrocarbons has accelerated further since the beginning of the Russian invasion. The barrel of Brent is up 66% since early 2022, currently at $130. Today’s crisis has been compared to the oil crisis of 1973, notably by Bruno Le Maire.
What impact on the economy?
In 1973, the Yom Kippur War between Israel and several Arab countries triggered the oil crisis. To respond to Western countries’ support for Israel, the Organization of the Petroleum Exporting Countries (OPEC) took two measures: an initial increase in the price of a barrel by 70%, as well as a sharp reduction in their production. exports to Europe, the United States and Japan. Before the war, the barrel cost only 2 dollars.
As a result of these decisions, the price of a barrel quadrupled in the space of six months, exactly between October 1973 and April 1974. Faced with the shortage of oil, motorists queued at gas stations in Europe and in the United States, where they had we’ve never seen. Pump prices in France rose by 30% between October 1973 and January 1974 to 1.62 francs. Today, prices at the pump have also risen since Christmas. Unleaded 95 increased by 17%. Diesel recently cost 14 cents in one week. Some now fear that prices will rise above 2.50 euros per litre, both for petrol and diesel.
What measures have been taken?
In 1973 drastic measures were taken to save oil. Traffic was banned on Sundays in the Netherlands, Belgium, Germany, Denmark and Switzerland. Car racing is prohibited in France. The maximum speed on the road has also been increased to 90 km/h and to 120 km/h on the highway. Given the massive dependence of economies on oil at the time for electricity generation, lighting of shops and offices in France was banned between 10 p.m. and 7 a.m. The TV shows stopped at 11pm. In Britain, people have been asked to heat only one room per apartment.
Today, countries are less dependent on oil for electricity production. This is especially true in France, with nuclear† Influenced by the rise in the price of a barrel, inflation rose to 9% in 1973, almost 14% in 1974, and about 12% in 1976. Today, inflation in the eurozone is making a comeback. It flirts at 6% year-on-year. We hadn’t seen that since the mid-1980s.”After 1973 we started to use more and more fossil fuels” Explain François Gemenne, teacher at Sciences Po and the Sorbonne. He is also a supporter of Yannick Jadot, environmental candidate for the 2022 presidential election.
A missed opportunity in 1973?
†One of the effects of the 73 oil shock, it may be that we became aware of the planetary boundaries, the limits of natural resources“explains the person who is also director of the Hugo Observatory at the University of Liège.”We must not forget that this oil shock comes a year after the publication of the WITHOUT report on the limits of growth. For François Gemenne, the 1973 oil shock “sounds a bit like the end of the recreation of the ‘Golden sixties’ decade” who have been “characterized by a logic of infinite growth”†
“Somehow this war reminds us how much we remain trapped in fossil fuels.”
François Gemenne, professor at Science Po
The teacher of Sciences Po also states that the war in Ukraine can paradoxically lead to an acceleration of the energy transition..”LIf we refuel or heat our apartments, we fund Putin’s war in spite of ourselveshe explains. This gives additional reasons to reduce our consumption. †If we had started the energy transition 20 or 30 years ago, from the first IPCC warnings, we probably wouldn’t be in this dependence and therefore vulnerability to Russia”, concludes Francois Gemenne.