Oil is the world's main source of energy and is expected to remain so in the coming decades. As technology is changing our environment today, so did oil in the 1920s and 1930s. Since then, crude oil has become the main raw material in every economy, regardless of whether it is developed or developing. Changes in crude oil prices are having positive and negative implications on every economy. When these price changes are severe, one could easily conclude that an economy will face problems such as unfavorable supply shocks or, according to the theory, adverse supply shocks. When problems like this occur in the global oil market, it is usually called a global oil crisis. The world has witnessed two major oil crises and is currently facing another. To discuss the recent oil crisis and its economic implications I will refer to the appropriate economic theory and also examine the two previous oil shocks in the world. As I mentioned earlier, the main problem an economy faces during any oil crisis is the adverse supply shock. Adverse supply shocks are unexpected events that reduce aggregate supply and thus production decreases and prices increase. In the language of economics we call this stagflation. Furthermore, I will refer to the organization that has caused the three supply shocks so far. OPEC, the Organization of the Petroleum Exporting Countries, has the power to control world oil prices by reducing the world's oil supply. This is what happened in the oil crisis that occurred in the early 1970s (Mankiw 252). OPEC's reduction in oil supply had immediately doubled the world price of oil. As I said earlier, this caused stagflation in all oil-importing countries. I will also refer to the US statistics on the oil crisis that occurred in the early 1970s. In the year 1974 the variation in the price of oil was 68% and therefore there was an inflation of the order of 11% and a negative variation in the unemployment rate from 4.9% to 5.6%. (Mankiw 253) For example, during the crisis of the 1980s we had the same impact on the economy, such as double-digit inflation rates and high unemployment. These 100% changes in the price of oil caused a negative supply shock to the US economy. The main negative effects of the adverse supply shock are described as: an upward shift of the short-run aggregate supply curve (SRAS) and a decrease in the level of production and an increase in prices. To get a clearer picture of what is happening in each economy, I will carefully consider the graph where these changes can be seen. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original Essay After plotting the appropriate graph, it is much easier to analyze the economic implications of an adverse supply shock caused primarily by the oil crisis. It is obvious to see the changes that have been made to the economy with the increase in oil prices. We have an upward shift of the SRAS from point P1 to point P2, caused by the increase in price. Furthermore, this change shifted production from point Y1 to Y2 and initiated stagnation, which is the main impact on the economy of the oil crisis. Furthermore, it is interesting to analyze the economic implications of the extra petrodollars earned from rising prices. I will refer to an article that contains data..