Uk Energy Crisis Essay

There were a series of energy crises between 1967 and 1979 caused by problems in the Middle East but the most significant started in 1973 when Arab oil producers imposed an embargo.

The decision to boycott America and punish the west in response to support for Israel in the Yom Kippur war against Egypt led the price of crude to rise from $3 per barrel to $12 by 1974.

The price of petrol rocketed, making all transport more expensive. There was even talk in Britain of rationing using coupons left over from the second world war.

The Conservative government, led by Ted Heath, was already struggling to cope with high food prices caused by global shortages. This fed into an inflation rate which, under Harold Wilson's Labour government, hit more than 24% (by comparison, inflation in January 2011 was at 4%, double the Bank of England's current target of a 2% inflation rate).

Trade unions submitted claims for higher wages to keep up with rising prices, which led to confrontation with the miners, the introduction of a three-day week and ultimately the fall of the Tories in a general election of February 1974.

A Labour government under Harold Wilson took power but faced a collapse in corporate profits and stock market values. Burmah Oil, a big name in the energy sector, had to be rescued by the Bank of England after running into problems.

But the wider oil industry in Britain was a notable winner at this time as money was poured into the North Sea on the back of high crude oil prices, allowing the UK to eventually become a net exporter.

This period of high energy prices was not good for the country's already shaky manufacturing base. The gradual demise of the once highly important British-owned car industry was hastened by the extra costs of production.

High oil prices also encouraged a switch to smaller vehicles and helped create the environment in which Japanese firms such as Toyota and Honda became dominant in the UK and further afield.

The Japanese, who had long developed smaller and more fuel-efficient cars, were eventually welcomed in Britain and their experience helped to resurrect UK manufacturing.

The oil price shock also changed the nature of British relations abroad, which had been more focused on the dangers posed by Russia and China as part of a cold war. The Middle Eastern countries had been seen up until 1973 as reliable friends, but the UK and others in the west gave the region far more attention after the embargo, even though it remained in place for a relatively small amount of time.

From then onwards – particularly after the 1979 oil shock caused by the fall of the Shah in Iran – Britain paid much more attention to those areas of the world that could provide stable and alternative oil and gas supplies such as Nigeria and Indonesia.

The early 70s also led to a resurgence of interest in other forms of energy such as solar, which gradually withered as the price of oil began to fall and Britain became self-sufficient. It took countries with much smaller indigenous oil supplies to take radical new steps. Brazil, for example, made a revolutionary switch to running its vehicles on ethanol from sugar cane.

Britain's interest in alternative energy has been revived due to climate change and the need for a low-carbon economy. The current instability in the Middle East may finally bring a more lasting change to the way we work and live.

• This article was amended on 12 March 2011. A phrase in the original said that the price pressures confronting the Heath government "fed into an inflation rate that hit more than 25%". This has been corrected.

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