1970s commodities boom

Rise of many commodity prices in the 70s

This article possibly contains original research. Author has a history of WP:OR pages - please verify the information is accurate and appropriate Please improve it by verifying the claims made and adding inline citations. Statements consisting only of original research should be removed. (July 2024) (Learn how and when to remove this message)

|

PPI commodities

M2 money supply % change year over year

Producer price index for commodities

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.[1][verification needed] 15% of all maritime trade passed through the Suez Canal in 1966, the year before it closed.[2][verification needed]

Price of oil adjusted for inflation

Price of oil (nominal)

West Texas Intermediate oil price history 1946-2022[3]

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.[4][verification needed]

## Food commodities

[edit]

Commodity Prices

soybean

wheat

corn

copper

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.[5][verification needed]

### Sugar

[edit]

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.[6][7][verification needed]

Sugar prices 1962–2022

### Coffee

[edit]

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.[8][verification needed]

Coffee prices 1973–2022

## Gold

[edit]

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.[9][verification needed]

Price of gold 1915-2022

## Copper

[edit]

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.[10][11][verification needed]

## Coal

[edit]

Coal Prices 1949-2011

Anthracite

Bituminous

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.[12][verification needed]

## Floating exchange rates and commodities

[edit]

US Dollar Index (DXY) 1971-2022

USD/GBP exchange rate

USD/Canadian dollar exchange rate

EUR/USD (inverted) exchange rate

USD/JPY exchange rate

USD/SEK exchange rate

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.[13][10][verification needed]

## See also

[edit]

* 1976 sterling crisis
* 2000s commodities boom
* 2020s commodities boom
* List of commodity booms
* Petrocurrency
* Stagflation
* U.S. Dollar Index
* Winter of Discontent

## References

[edit]

1. ^ "Suez Crisis". 14 September 2022.
2. ^ "Choked off: The Six Day War's Impact on Maritime Trade".
3. ^ "Crude Oil Prices - 70 Year Historical Chart".
4. ^ Corbett, Michael. "Oil Shock of 1973–74". Federal Reserve History. Retrieved 2022-08-27.
5. ^ "USDA ERS - Agricultural Commodity Price Spikes in the 1970s and 1990s: Valuable Lessons for Today".
6. ^ "A History of Sugar Prices".
7. ^ Ennis, Thomas W. (5 January 1972). "Sugar Futures up on Soviet Buying". The New York Times.
8. ^ Maidenberg, H. J. (12 February 1976). "Higher Coffee Prices Are Expected". The New York Times.
9. ^ Elwell, Craig K. (23 June 2011). "Brief History of the Gold Standard in the United States" (PDF). Congressional Research Service.
10. ^ a b Cooper, Richard N.; Lawrence, Robert Z. (1975). "The 1972–75 Commodity Boom" (PDF). Brookings Papers on Economic Activity. 3 (3): 671–723\. doi:10.2307/2534151. JSTOR 2534151.
11. ^ "A History of Copper Prices".
12. ^ "Study of coal prices. [USA; 1948 to 1969; 1969 to 1974]". March 1976. OSTI 5516263.
13. ^ "About the IMF: History: The end of the Bretton Woods System (1972–81)".

* https://www.brookings.edu/wp-content/uploads/1975/12/1975c_bpea_cooper_lawrence_bosworth_houthakker.pdf

* v
* t
* e

Financial bubbles

* Market trend
* Credit cycle
* Irrational exuberance
* Social contagion
* Real-estate bubble
* Stock market bubble

Commercial revolution
(1000–1760)|

* Tulip mania (1634–1637)
* Mississippi bubble (1684–1720)
* South Sea bubble (1711–1720)
* Bengal Bubble of 1769 (1757–1769)

1st Industrial Revolution
(1760–1840)|

* Canal Mania (c. 1790–c. 1810)
* Carolina gold rush (1802–1825)
* 1810s Alabama real estate bubble
* Georgia Gold Rush (1828–c. 1840)
* 1830s Chicago real estate bubble
* Chilean silver rush (1830–1850)

1840–1870|

* Railway Mania (c. 1840–c. 1850)
* California gold rush (1848–1855)
* Queen Charlottes Gold Rush (1851)
* Victorian gold rush (1851–c. 1870)
* New South Wales gold rush (1851–1880)
* Australian gold rushes (1851–1914)
* Fraser Canyon Gold Rush (1858)
* Pike's Peak gold rush (1858–1861)
* Rock Creek Gold Rush (1859)
* Pennsylvania oil rush (1859–1891)
* Similkameen Gold Rush (1860)
* Stikine Gold Rush (1861)
* Colorado River mining boom (1861–1864)
* Otago gold rush (1861–1864)
* Cariboo Gold Rush (1861–1867)
* First Nova Scotia Gold Rush (1861–1874)
* West Coast gold rush (1864–1867)
* Big Bend Gold Rush (c. 1865)
* Vermilion Lake gold rush (1865–1867)
* Kildonan Gold Rush (1869)
* Omineca Gold Rush (1869)

2nd Industrial Revolution
(1870–1914)|

* 1870s Lapland gold rush
* Coromandel Gold Rushes (c. 1870–c. 1890)
* Cassiar Gold Rush (c. 1870–c. 1890)
* Black Hills gold rush (1874–1880)
* Colorado Silver Boom (1879–1893)
* Western Australian gold rushes (c. 1880–c. 1900)
* Indiana gas boom (c. 1880–1903)
* Ohio oil rush (c. 1880–c. 1930)
* Tierra del Fuego gold rush (1883–1906)
* Cayoosh Gold Rush (1884)
* Witwatersrand Gold Rush (1886)
* Encilhamento (1886–1890)
* Cripple Creek Gold Rush (c. 1890–c. 1910)
* Klondike Gold Rush (1896–1899)
* Second Nova Scotia Gold Rush (1896–1903)
* Kobuk River Stampede (1897–1899)
* Mount Baker gold rush (1897–c. 1925)
* Nome Gold Rush (1899–1909)
* Fairbanks Gold Rush (c. 1900–1918)
* Texas oil boom (1901–1918)
* Cobalt silver rush (1903–1918)
* Porcupine Gold Rush (1909–1918)

Interwar period
(1918–1939)|

* 1920s Florida land boom (c. 1920–1925)
* Fairbanks Gold Rush (1918–c. 1930)
* Texas oil boom (1918–1945)
* Cobalt silver rush (1918–c. 1930)
* Porcupine Gold Rush (1918–1945)
* 1930s Kakamega gold rush
* Third Nova Scotia Gold Rush (1932–1942)

Post–WWII expansion
(1945–1973)|

* Texas oil boom (1945–c. 1950)
* Porcupine Gold Rush (1945–c. 1960)
* Poseidon bubble (1969–1970)

The Great Inflation
(1973–1982)|

* 1970s commodities boom
* Mexican oil boom (1977–1981)
* Silver Thursday (1980)
* New Zealand property bubble (c. 1980–1982)

Great Moderation/
Great Regression
(1982–2007)|

* 1980s oil glut
* New Zealand property bubble (1982–)
* Spanish property bubble (1985–2008)
* Japanese asset price bubble (1986–1990)
* Dot-com bubble (1995–2000)
* Baltic states housing bubble (2000–2006)
* Irish property bubble (c. 2000–2007)
* 2000s commodities boom (2000–2008)
* 2000s Danish property bubble (2001–2006)
* United States housing bubble (2002–2006)
* Romanian property bubble (2002–2007)
* Polish property bubble (2002–2008)
* Canadian property bubble (2002–)
* Chinese property bubble (2005–2011)
* Lebanese housing bubble (2005–2008)

* Chinese stock bubble of 2007
* Uranium bubble of 2007

Information Age
(2007–present)|

* 2000s commodities boom (2008–2014)
* Lebanese housing bubble (2008–)
* Corporate debt bubble (2008–)
* Australian property bubble (2010–)
* Cryptocurrency bubble (2011–)
* Everything bubble (2020–21)

* Carbon bubble
* Green bubble
* Social media stock bubble
* Unicorn bubble
* U.S. higher education bubble

*[v]: View this template
*[t]: Discuss this template
*[e]: Edit this template