ELI5: The 1979 Energy Crisis

Advanced Definition
Last updated: Jul 27, 2023

The 1979 Energy Crisis - A Tale of Oil Shortages and Economic Turmoil

Welcome, young learners, to the captivating tale of the 1979 Energy Crisis—a momentous period when the world faced an enchanting challenge of oil shortages and economic upheaval. Let's embark on this historical journey with simple explanations and relatable examples!

đź’ˇ Key Ideas

  • Oil Price Shock: The crisis was triggered by an oil price hike orchestrated by OPEC in response to political events, leading to soaring oil prices in 1979.

  • Impact on Economies: The steep rise in oil prices had a ripple effect on economies worldwide, causing inflation, fuel shortages, and challenges for oil-dependent industries.

  • Energy Conservation: Governments encouraged energy conservation practices to reduce consumption and cope with the shortage.

  • Investment in Alternative Energy: The crisis spurred investment in alternative energy sources like solar and wind to diversify energy dependence.

  • Lessons Learned: The crisis served as a valuable lesson, shaping energy policies and inspiring efforts toward energy efficiency and renewable energy adoption.

  • Long-Term Effects: The events of the 1979 Energy Crisis influenced energy policies and international relations for years to come, leaving a lasting impact on the global energy landscape.

Understanding the 1979 Energy Crisis

In the year 1979, the world found itself amidst an energy crisis—a tumultuous time caused by a series of events that shook the global energy landscape. Here's a closer look at the key elements of this story:

The Oil Shortage Dilemma

Imagine a realm where oil, like a magical elixir, fuels economies and keeps the wheels of modern life turning. In the 1970s, many countries relied heavily on oil imports to meet their energy needs.

  1. OPEC's Price Hike: A powerful group called the Organization of the Petroleum Exporting Countries (OPEC) held the key to the world's oil supply. In response to political events, OPEC decided to reduce oil production and raised the price of oil in 1979.

  2. Oil Price Shock: This oil price hike, like a powerful spell, sent shockwaves across the globe, making oil more expensive for countries that heavily depended on it.

The Impact on the Economy

As oil prices soared, it sparked a chain reaction, affecting economies in various ways:

  1. Inflation Surge: Higher oil prices rippled through the economy, leading to inflation—an increase in the general price level of goods and services.

  2. Oil-Dependent Industries: Industries heavily reliant on oil, like transportation and manufacturing, felt the heat as higher energy costs squeezed their profit margins.

  3. Fuel Shortages: Some regions experienced fuel shortages, like an enchantment restricting access to a vital resource.

The Iranian Revolution Twist

Another twist in the tale came from Iran, where a revolution led to a change in government and disrupted oil production:

  1. Iranian Revolution: In 1979, Iran experienced a revolution, leading to political turmoil and a change in government. The revolution caused uncertainty and disrupted oil production in the country.

  2. Further Oil Supply Disruptions: Iran's oil production decreased, adding to the oil shortage woes and exacerbating the global energy crisis.

Government Responses

Governments around the world, like resourceful wizards, took various measures to combat the crisis:

  1. Energy Conservation: Many countries encouraged energy conservation practices, urging citizens to reduce energy consumption.

  2. Investment in Alternative Energy: Governments started investing in alternative energy sources, like solar and wind, as a long-term solution to reduce reliance on oil.

  3. Strategic Oil Reserves: Some countries built strategic oil reserves, like a hidden treasure, to ensure they had enough oil in times of shortages.

The Potential for Even Worse Outcomes

In the fantastical world of the 1979 Energy Crisis, there was a lurking possibility of even more dire consequences had certain events unfolded differently. Let's explore the realm of "what could have been" with a touch of imagination:

  1. Global Economic Recession: The oil price shock could have been more severe, leading to a deeper and prolonged global economic recession. Imagine a powerful spell of economic stagnation affecting many countries, hindering growth, and causing hardships for citizens.

  2. Social Unrest and Protests: If fuel shortages had intensified, citizens might have faced difficulties in obtaining essential goods and services, leading to social unrest and protests in some regions. Like a brewing storm, such unrest could have caused further instability.

  3. Geopolitical Conflicts: Escalating tensions between oil-importing and oil-exporting countries could have led to geopolitical conflicts and disputes. This may have strained international relations, creating a more volatile and unpredictable global landscape.

  4. Long-Term Dependence on Oil: A failure to invest in alternative energy sources could have resulted in continued heavy reliance on oil, making countries vulnerable to future energy crises. The path to a sustainable and diversified energy future might have been delayed.

  5. Economic Disparities: The burden of rising energy costs might have disproportionately affected vulnerable populations, exacerbating economic disparities within and among nations.

  6. Environmental Impact: Increased oil consumption without a focus on sustainability might have worsened environmental issues, contributing to pollution and climate change challenges.

Fortunately, resourceful governments and societies worked together, like courageous adventurers united in a quest, to mitigate the crisis's impact and set the stage for a more sustainable energy future. As we reflect on this historical journey, let us remember the importance of preparedness and cooperation in the face of challenges to build a more resilient and harmonious world.


The 1979 Energy Crisis was a remarkable chapter in history, a moment when oil shortages and economic challenges tested the world's resilience. By learning from this tale, we can understand the importance of diversifying energy sources and conserving resources, like wise adventurers preparing for future challenges.

So, young learners, may you remember the lessons from this story and embrace a future where energy sustainability and resourcefulness guide us on our ongoing journey toward progress and prosperity.