The 1973 Oil Crisis - In October of 1973 Middles-eastern ...



In October of 1973 Middle-Eastern OPEC nations stopped exports to the US and other western nations. They meant to punish the western nations that supported Israel, their enemy, in the Yom Kippur War, but they also realized the strong influence that they had on the world through oil. One of the many results of the embargo was higher oil prices all throughout the western world, particularly in America. The embargo forced America to consider many things about energy, such as the cost and supply, which up to 1973 no one had worried about (Spiegelman).

In order to understand the main cause of the oil crisis one must first know the history of the region and the Arab-Israeli conflict. After World War II a *Zionist state, known as Israel, was created on 56% of the land that was formerly known as Palestine. This state served as a homeland for Jews. The local Arabs were enraged by the fact that the Palestinian land had been taken to create this state. They refused to acknowledge Israel as an independent state. The Arabs began to launch efforts to recapture the land that they felt was rightfully theirs. This created the Suez-Sinai War. The British and the French sided with the Israelis in order to punish Nasser for nationalizing the Suez Canal. The strong Israeli military forces quickly defeated the Arabs. The Arabs responded to this defeat by uniting. In 1967 Israel launched the Six-Day War, claiming much land. In 1973 Arab forces retaliated. On Yom Kippur, the holiest Jewish holiday, Arab forces attacked, backed by Soviet technology (The Mid-east Oil Crisis). Saudi Arabia's King Faisal swayed other oil supporting countries into placing an embargo on crude oil to Western nations, in late October. This was meant to punish the Western states that had supplied weapons and aid to Israel (The Arab oil embargo of 1973-74). Arab oil-producing countries wished to pressure the Western countries, specifically America into demanding that Israel withdraw their troops from the Arab territories that they had occupied since 1967. This included the ones that the Israelis had recently conquered (Palmer, p.871). They used the embargo in this way as a political tactic. They were also able to use the embargo for economic means. Once they had placed the embargo on the west, the world's largest consumer of oil, the Arabs realized the power that they had over the world through oil. Once they had resumed shipments of oil they were able to keep the prices high and make a larger profit. Panicking investors and oil companies added to the surge in oil prices in the U.S. These causes plunged a nation where everything seemed to revolve around cars into desolation and insecurity. America found that it could no longer afford to thoughtlessly consume oil. Philosopher E.F. Schumacher said of the crisis, "The party's over."(Spiegelman).

The immediate results of the Oil Crisis were dramatic. Prices of gasoline quadrupled, rising from just 25 cents to over a dollar in just a few months. The American Automobile Association recorded that up to twenty percent of the country’s gas stations had no fuel one week during the crisis. In some places drivers were forced to wait in line for two to three hours to get gas (Frum, p.320). The total consumption of oil in the U.S. dropped twenty percent. This was due to the effort of the public to conserve oil and money. There was an instant drop in the number of homes created with gas heat, because other forms of energy were more affordable at this time (Arab Oil Embargo of 1073-74).

The U.S. government went to desperate measures to improve the situation that America found itself in. Congress issued a 55mph speed limit on highways. This was a good thing. Not only did oil consumption go down, but fatalities decreased overnight. Today's fuel economy stickers come from the effort to preserve oil in the 70's. Daylight savings time was issued year round in an effort to reduce electrical use. These changes were made in hopes of preserving oil. Tax credits were offered to those who developed and used alternative sources for energy (The Arab Oil Embargo of 1973-74). These included solar and wind power. Nixon, who was president at that time, ordered the department of defense to create a stockpile of oil in case the country needed the military to carry it through a time of chaos. There was a large cutback in oil consumption. Emergency rationing books were printed although they were never necessary due to the end of the embargo. Nixon formed the Energy Department and it became a cabinet office. It developed the national energy policy. They made plans to make the U.S. energy independent (The Arab Oil Embargo of 1973-74).

Gasoline companies and stations also did all that they could to preserve oil. Nixon had issued a voluntary cutback on the consumption of gasoline. Gas stations would voluntarily close on Sundays. They refused to sell to customers who weren't "regulars." Gas stations also wouldn't sell more than ten gallons of gasoline to a customer at a time. They felt that these efforts would help the public to become more fuel-efficient (The Arab Oil Embargo of 1973-74).

The public helped to retain energy as well. Families turned their thermostats down to sixty-five degrees. The rise in oil prices also caused the public to be more fuel-efficient. Companies and industries switched their energy source to coal (The Arab Oil Embargo of 1973-74). People searched for alternative energy sources. People traded their mammoth cars that had thoughtlessly been speeded down highways to over-heated homes in the suburbs for smaller more fuel-efficient models (Spiegelman).

The Arabs began to ship oil to Western nations again, but this time at inflated prices. One of the long-term effects of the embargo was an economic recession throughout the world. Inflation remained above ten percent and unemployment was at its record high. The era of economic growth (which had been in effect since World War II) had now ended. It also ended the common belief that economic prosperity reflected oil consumption statistics (The Arab Oil Embargo of 1973-74). The long-term effects still remain even today. Today's appliances or the good ones at least, require less than half the energy that they required three decades ago (Mastio). Speed limits and fuel economy stickers are a result of the government’s efforts to preserve oil. Exploration and development of resources within the U.S. increased dramatically. The government was very concerned about the dependency of the U.S. on foreign oil. The Corporate Average Fuel Economy (CAFE) eventually raised its standards up to 27.5 miles per gallon. Oil heat was slowly replaced by electric heat. The number of homes using oil heat fell about twenty-three percent. The decline would have been even more rapid were it not for the new homes with natural gas heat in northern regions. This was helped by a slight population growth in the south and west United States where electric heat is more popular. Electric heat is also more readily available to the suburbs. Heating systems now are twenty percent more efficient than they were in 1973.

One of the biggest long-term effects was the massive change in cars due to the oil embargo. In Detroit the production of giant, gas guzzling cars was halted. Cars with big engines and large heavy bodies were no longer made in order to preserve oil and boost the economy. Detroit was forced to increase the fuel efficiency of all its cars. Today's models like the Geo Metro and the Ford Escort are modeled after the 1970's Chevy Vega and Ford Pinto (The Arab Oil Embargo of 1973-74). The sale of Japanese cars increased, because they met the efficiency standards that American cars did not. The American Auto industry was forced to meet these standards and reformulate its cars (Spiegelman).

Although the embargo ended only a year after it began in 1973, the OPEC nations had quadrupled the price of oil in the West. The embargo opened a new era in international relations. It was a political and economical achievement for the Middle East (Palmer, p.890). Third World states discovered that their natural resources, on which they depended upon, specifically oil, could be used as a weapon in both political and economical situations. The Rising oil prices continued to be a threat to not only America’s economy, but also that of the world. President Jimmy Carter would later call the oil situation in the 70’s "the moral equivalent of war." (Speigelamn). Never had the price of an essential commodity risen so quickly and dramatically. The vulnerability of the Western world had truly been revealed (Palmer, p. 932)



Directions: After watching the “What Makes Gas Prices Rise?” Power Point and reading “The 1973 Oil Crisis” article, answer the following comprehension multiple choice questions about the oil industry and the 1970’s oil crisis. Questions 1-6 are taken from the Power Point and 7- are taken from the article.

1. What are the steps in the production of gas?

a. exploration, drilling, production, consumption, distribution

b. exploration, transportation, delivery, consumerism

c. exploration, transportation, production, distribution, consumption

d. exploration, transportation, production, consumption, distribution

2. What are some factors to be considered when exploring for oil?

a. How oil companies might find the oil in a dangerous place like a volcano.

b. The weather such as hurricanes and storms can effect exploration.

c. Safety features are not always kept up-to-date on the oil rigs.

d. Oil exploration is really a simple oil extraction procedure.

3. What is the most cost effective means of transporting oil?

a. Tankers b. Trucks c. Train d. Pipeline

4. The costs of research and development in the oil industry are a minimal addition to the consumers cost for gasoline.

True False

5. When considering gasoline consumption, large sport utility vehicles and older model cars consume large amounts of gasoline and therefore,

a. cause a greater demand on gas which drives the price of gasoline way up.

b. requires you to stop more often to fill up the tank.

c. doesn’t get very good gas mileage while traveling from place to place.

d. All of the above

6. All the taxes placed on gasoline account for as much as _____% on each gallon of gas.

a. 30% b. 18% c. 23% d. 60%

7. Why did OPEC nations “punish” western nations?

a. because they were nations that didn’t do the right thing

b. because they aided their enemy, Israel, during the Yom Kippur War

c. because OPEC believed the western nations were out to get them

d. All of the above

8. What did it mean when the article stated that Middle Eastern OPEC nations realized there was strength in oil?

a. That oil had a very strong smell

b. That crude oil was too strong before it was processed for use

c. That OPEC nations realized that western nations could be controlled with oil

d. None of the above

9. What was one of the most prevalent results of the Oil Embargo in America?

a. higher oil prices throughout the western world

b. lower oil prices for the state of Texas

c. higher oil prices for the Midwest over the South

d. higher oil prices for the northern and southern regions of the delta

10. In the article, what does the word “Zionist” mean?

a. a worldwide Jewish movement that resulted in the state of Israel

b. those people who were wanting to go to Zion

c. a Jewish movement that only Zionists could attend

d. an important sect of the Jewish community in the Middle East

11. How much of the Palestinian land was given to the Jews?

a. 65% b. 56% c. 31% d. 50%

12. Why do you suppose Arab forces retaliated on Yom Kippur, the holiest of Jewish holidays?

a. It was a war tactic to show their hatred toward them and it is also a good time to catch them off guard while they are engaged in other activities

b. Because all of the Jewish kids would be out of school and it will be easier to catch them

c. Because the Jews would definitely get their feelings hurt over such an act

d. Both “a” and “c”

13. Why did Arabia’s King Faisal sway other oil supporting countries into placing an embargo on Western nations?

a. because he new this would make stock market prices go up quickly

b. it was meant to punish Western nations that supplied weapons and aid to Israel

c. because it would give them more money to drill in places they hadn’t been able to

d. because it was against their religion to ask for money

14. What did Arab OPEC countries realize as a result of the Arab Oil Embargo?

a. They realized the power that they had over the world through oil

b. That the United States didn’t care if they withheld oil or not

c. Once they had resumed shipping, they were able to keep prices high and make a larger profit

d. Both answers “a” and “c”

15. What did the philosopher, E.F. Schumacher mean when he said “The party’s over.”?

a. that there would not be any more celebrating in the United States for awhile

b. that there wouldn’t be any more cheap gas and that the Arabs had learned how to manipulate the situation to their advantage

c. the good relations we had had with the OPEC nations was fast coming to a close

d. the oil industry was not going to be allowed to party anymore

16. What was the percentage of decrease in oil consumption during the Oil Embargo?

a. 25% b. 75% c. 20% d. 40%

17. Determine which U.S. measures during the Oil Embargo was not taken:

a. Daylight savings time

b. curfew of 10:00 pm for all citizens

c. tax credits offered for finding alternative sources of energy

d. congress issued 55mph on highways

18. What department was created as a result of the energy crisis?

a. The Department of Education b. The Department of Oil & Gas

c. The Department of Defense d. The Department of Energy

19. What did the gas stations and companies do to conserve gas?

a. Only sell gas every other day b. Wouldn’t sell more than 10 gallons at a time

c. Voluntarily close on Sundays d. Both “b” and “c” are correct

20. What measures did the public take to conserve gas?

a. Families turned down thermostats to 65 b. People traded big cars for economy cars

c. People started running to work d. Both “a” and “b” are correct

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