A Brief History
On March 18, 1974, the so called Arab Oil Embargo came to an end, but any celebrations were certainly premature!
Digging Deeper
Digging deeper, we find two major factors involved in making this crisis as important as it was and still is.
The first factor was that it had appeared US production of oil had peaked and the world believed that from about 1970 onward it would continue to decline more or less on a constant basis.
The other issue at hand was and still is the Arab-Israeli conflict. The US is pledged to guaranty the continuation of Israel as an independent state and most Arab (and other Muslim countries) countries are determined to see Israel either eradicated or reduced to an even tinier size.
With this background, Egypt and Syria launched a surprise attack on Israel in October of 1973 during the Jewish holiday Yom Kippur.
The Soviet Union poured war materiel into those countries and against demands by Arab countries the US poured war materiel into Israel.
In retaliation against the US support of Israel, OPEC (Organization of Petroleum Exporting Countries) declared a reduction in oil production, an increase in oil prices, and an embargo against imports to the US and any countries supporting Israel. Oil prices tripled over the next few months and in an economic situation already tumbling toward recession the economy of the US and industrialized nations was rocked. Gasoline in the US went from about 35 cents a gallon to over 50 cents a gallon and temporary shortages plagued the country. For the first time, fuel efficiency became an issue and people waited for hours in lines to get their cars gassed up.
Although the crisis appeared to last only a few months, the ramifications of it are still going on today! For 13 years the US had imposed a 55 miles per hour speed limit on cars and trucks designed to cruise much faster on roads designed for much higher speeds. Gasoline taxes on national and state levels went up and are today ten times what they were! Emboldened by the success of raising oil prices oil producing countries have continued to keep prices high, about $100 a barrel compared to $3 a barrel when the crisis started!
Although the 55 mph limit has been rescinded (it only saved about 1% of gasoline consumption) government mandated requirements for improved fuel efficiency has transformed the US roadscape from huge gas guzzling cars to smaller more economical ones, and ones often made by companies from outside the US. Trucks have almost completely made the transition to diesel engines and airlines have shrunk the size of seats in airliners to carry more people.
New relaxed environmental rules have allowed the US to massively increase its production of oil and natural gas, reducing the impact of future problems, such as the 1979 oil crisis precipitated by the Iranian revolution. The economic crash of 2008 was greatly aggravated by a temporary increase in oil prices to almost $150 a barrel!
Only time will tell if the industrialized world will conquer its addiction to oil and reap the benefits of security and an improved economic future. Question for students (and subscribers): What do you think will happen? Will technology take the oil gun from our head? Please let us know in the comments section below this article.
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Historical Evidence
For more information, please see…
Rabinovich, Abraham. The Yom Kippur War: The Epic Encounter That Transformed the Middle East. Schocken, 2007.
Siniver, Asaf. The Yom Kippur War: Politics, Diplomacy, Legacy. Oxford University Press, 2013.
