January 15, 2011

Oil shocks and economic recessions

Oil shocks and economic recessions

Here a summary of oil market disruptions and economic downturns since the Second World War. Every recession (with one exception) was preceded by an increase in oil prices, and every oil market disruption (with one exception) was followed by an economic recession.


Summary of significant events since World War II. Source: Hamilton (2011).
Gasoline
shortages
Price
increase
Price
controls
Key
factors
Business cycle
peak
Nov 47-Dec 47Nov 47-Jan 48
(37%)
no
(threatened)
strong demand,
supply constraints
Nov 48
May 52Jun 53
(10%)
yesstrike,
controls lifted
Jul 53
Nov 56-Dec 56
(Europe)
Jan 57-Feb 57
(9%)
yes
(Europe)
Suez CrisisAug 57
nonenoneno---Apr 60
noneFeb 69 (7%)
Nov 70 (8%)
nostrike, strong demand,
supply constraints
Dec 69
Jun 73

Dec 73-Mar 74
Apr 73-Sep 73
(16%)
Nov 73-Feb 74
(51%)
yesstrong demand,
supply constraints,
OAPEC embargo
Nov 73
May 79-Jul 79May 79-Jan 80
(57%)
yesIranian revolutionJan 80
noneNov 80-Feb 81
(45%)
yesIran-Iraq War,
controls lifted
Jul 81
noneAug 90-Oct 90
(93%)
noGulf War IJul 90
noneDec 99-Nov 00
(38%)
nostrong demandMar 01
noneNov 02-Mar 03
(28%)
noVenezuela unrest,
Gulf War II
none
noneFeb 07-Jun 08
(145%)
nostrong demand,
stagnant supply
Dec 07


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