Chapter 26: International Energy Agency
The Arab oil embargo of October 1973 was a pivotal point in energy history, exposing the vulnerability of Western energy supplies and setting off an unprecedented energy crisis. Oil prices quadrupled almost overnight, inflation soared and the global economy began to sputter. Western governments reacted to this crisis in a panicking and uncoordinated way, thus aggravating the crisis. At the initiative of US Secretary of State Henry Kissinger, 16 Western governments decided to set up the IEA in November 1974, in order to organize solidarity among the major oil consumers. The main task of the new agency was to administer a system of emergency oil stocks that could be jointly deployed and even shared among the members in case of a future oil crisis.For practical purposes, the IEA’s founding fathers decided to create the IEA as a daughter organization of the OECD, a decision that still has far-reaching consequences for the IEA’s functioning today. Since the IEA was created at the height of a dramatic oil shock, the member states wanted the new agency to be operational as quickly as possible. Therefore, they chose to integrate the IEA into the existing institutional machinery of the OECD rather than setting up a completely new, stand-alone organization from scratch. This choice meant, and still means, that only OECD member countries are eligible to join the IEA. Today, the IEA boasts 28 member states, all drawn from the industrialized democracies of Europe, North America and the Asia-Pacific.
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