1970s commodities boom

Rise of many commodity prices in the 70s July 2024 Author has a history of WP:OR pages - please verify the information is accurate and appropriate thumb|350px|right|PPI commodities #89A54E solid 3px M2 money supply % change year over year #4572A7 solid 3px Producer price index for commodities #AA4643 solid 3px United States Consumer Price Index The 1970s commodities boom refers to the rise of many commodity prices in the 1970s. Excess demand was created with money supply increasing too much and supply shocks that came from Arab–Israeli conflict, initially between Israel and Egypt. The Six-Day War where Israel captured and occupied the Sinai Peninsula for 15 years, the Closure of the Suez Canal (1967–1975) for 8 years of that, led to supply shocks. 66% of oil consumed by Europe at that time came through the Suez Canal and had to be redirected around the continent of Africa.https://www.history.com/topics/cold-war/suez-crisis Suez Crisis 14 September 2022 July 2024 15% of all maritime trade passed through the Suez Canal in 1966, the year before it closed.https://www.winton.com/longer-view/the-six-day-wars-impact-on-trade Choked off: The Six Day War's Impact on Maritime Trade July 2024 250 West Texas Intermediate oil price history 1946-2022https://www.macrotrends.net/1369/crude-oil-price-history-chart Crude Oil Prices - 70 Year Historical Chart Crude-oil-price-history-chart-2022.webp Price of oil adjusted for inflation Price of oil nominal price.webp Price of oil (nominal) The Yom Kippur War in late 1973 was Egypts attempt at crossing the Suez Canal and taking the Sinai Peninsula back from Israeli occupation. On October 19, 1973 Richard Nixon requested $2.2 billion to support Israel in the Yom Kippur War. That resulted in OAPEC countries cutting production of oil and placing an embargo on oil exports to the United States and other countries backing Israel. That was the start of the 1973 oil crisis.Corbett Michael https://www.federalreservehistory.org/essays/oil-shock-of-1973-74 Oil Shock of 1973–74 Federal Reserve History 2022-08-27July 2024 Food commodities thumb|300px|right|Commodity Prices #35DB3F solid 3px soybean #DBC67D solid 3px wheat yellow solid 3px corn #E8A02C solid 3px copper thumb|300px|Food Price Index US In the early 1970s, the Soviet Union and many other planned economies started importing large amounts of grains in the global markets, driving up demand for grains and oilseeds.http://www.ers.usda.gov/amber-waves/2009/march/agricultural-commodity-price-spikes-in-the-1970s-and-1990s-valuable-lessons-for-today USDA ERS - Agricultural Commodity Price Spikes in the 1970s and 1990s: Valuable Lessons for Today July 2024 Sugar Sugar prices spiked in the 1970s because of Soviet Union demand/hoarding and possible futures contracts market manipulation. The Soviet Union was the largest producer of sugar at the time. In 1974, Coca-Cola switched over to high-fructose corn syrup because of the elevated prices.https://www.winton.com/longer-view/the-sweet-and-sour-history-of-sugar-prices A History of Sugar Prices https://www.nytimes.com/1972/01/05/archives/sugar-futures-up-on-soviet-buying-purchases-on-world-market-said-to.html Sugar Futures up on Soviet Buying The New York Times 5 January 1972 Ennis Thomas W. July 2024 thumb|300px|center|Sugar prices 1962–2022 Coffee The price of coffee went up in the mid-1970s because of a black frost of 1975 that killed 66% of Brazil's coffee trees, which was the number one producer of coffee at the time. There was a big earthquake in 1976 in Guatemala that disrupted supply chains, the world's fifth biggest coffee exporter at the time. The Angolan Civil War started in 1975 disrupting their coffee production and shipping.https://www.nytimes.com/1976/02/12/archives/higher-coffee-prices-are-expected-retail-rise-is-seen-in-next-few.html Higher Coffee Prices Are Expected The New York Times 12 February 1976 Maidenberg H. J. July 2024 thumb|300px|center|Coffee prices 1973–2022 Gold The United States weaned itself off the gold standard in the 1970s, allowing the price of gold to float. The price of gold went from a set exchange rate of $42.22 per troy ounce in 1973 to almost $200 per ounce in 1976.Elwell Craig K. Brief History of the Gold Standard in the United States https://sgp.fas.org/crs/misc/R41887.pdf Congressional Research Service 23 June 2011July 2024 thumb|300px|center|Price of gold 1915-2022 Copper thumb|300px|Price of copper Price controls were implemented in the early 1970s to combat inflation but when those price controls were lifted on commodities like copper the prices appreciated. These quick price rises were known as the Nixon shock.Cooper Richard N. Lawrence Robert Z. The 197275 Commodity Boom Brookings Papers on Economic Activity 1975 3 3 671723 10.2307/2534151 2534151 https://www.brookings.edu/wp-content/uploads/1975/12/1975c_bpea_cooper_lawrence_bosworth_houthakker.pdfhttps://www.winton.com/longer-view/copper-bottomed-booms-and-busts A History of Copper Prices July 2024 Coal thumb|300px|Coal Prices 1949–2011 #000000 solid 3px Anthracite #851719 solid 3px Bituminous #929292 solid 3px Lignite Coal price increases in the 1970s were primarily demand driven. There was a strike by the United Mine Workers of America called The Brookside Strike in late 1974 that lasted for 3 weeks but was said to have little impact on prices.https://www.osti.gov/biblio/5516263 Study of coal prices. [USA; 1948 to 1969; 1969 to 1974] March 1976 5516263 July 2024 Floating exchange rates and commodities thumb|300px|right| #00A2FF #0076BA US Dollar Index (DXY) 1971-2022 #F27200 solid 3px USD/GBP exchange rate #017100 solid 3px USD/Canadian dollar exchange rate #004D80 solid 3px EUR/USD (inverted) exchange rate #BC002D solid 3px USD/JPY exchange rate #FFCD00 solid 3px USD/SEK exchange rate black solid 3px USD/CHF exchange rate After World War II the Bretton Woods system had fixed exchange rates between countries and pegged to gold. This kept some commodities like gold very stable. When the Bretton Woods system failed in the early 1970s and floating exchange rates started to float, commodities also became very volatile.https://www.imf.org/external/about/histend.htm About the IMF: History: The end of the Bretton Woods System (1972–81) July 2024 See also 1976 sterling crisis 2000s commodities boom 2020s commodities boom List of commodity booms Petrocurrency Stagflation U.S. Dollar Index Winter of Discontent References https://www.brookings.edu/wp-content/uploads/1975/12/1975c_bpea_cooper_lawrence_bosworth_houthakker.pdf Category:Cold War history of the United States Category:1971 in American politics Category:Economic history of the United States Category:Gold standard Category:Presidency of Richard Nixon Category:1971 in economic history Category:United States economic policy Category:1973 oil crisis