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Encyclopedia > 1973 oil crisis

The 1973 oil crisis began on October 17, 1973, when the members of Organization of Arab Petroleum Exporting Countries (OAPEC, consisting of the Arab members of OPEC plus Egypt and Syria) announced, as a result of the ongoing Yom Kippur War, that they would no longer ship oil to nations that had supported Israel in its conflict with Syria and Egypt (the United States, its allies in Western Europe, and Japan). is the 290th day of the year (291st in leap years) in the Gregorian calendar. ... For the song by James Blunt, see 1973 (song). ... OAPEC was established in 1968 with permanent headquarters in Kuwait It is an instrument of Arab cooperation whose objective is to provide support to the Arab oil industry. ... For other uses, see Arab (disambiguation). ... The Organization of Petroleum Exporting Countries (OPEC) is a large group of countries[1][2] made up of Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, Venezuela, and Ecuador (which rejoined OPEC in November 2007). ... Combatants  Israel  Egypt,  Syria,  Iraq Commanders Moshe Dayan, David Elazar, Ariel Sharon, Shmuel Gonen, Benjamin Peled, Israel Tal, Rehavam Zeevi, Aharon Yariv, Yitzhak Hofi, Rafael Eitan, Abraham Adan, Yanush Ben Gal Saad El Shazly, Ahmad Ismail Ali, Hosni Mubarak, Mohammed Aly Fahmy, Anwar Sadat, Abdel Ghani el-Gammasy, Abdul Munim... Synthetic motor oil being poured. ... A current understanding of Western Europe. ...


About the same time, OPEC members agreed to use their leverage over the world price-setting mechanism for oil in order to raise world oil prices, after the failure of negotiations with the "Seven Sisters" earlier in the month. Because of the dependence of the industrialized world on crude oil and the predominant role of OPEC as a global supplier, these price increases were dramatically inflationary to the economies of the targeted countries, while at the same time suppressive of economic activity. The targeted countries responded with a wide variety of new, and mostly permanent, initiatives to contain their further dependency. Petro redirects here. ... This article or section does not cite its references or sources. ...

Graph of oil prices from 1861-2007, showing a sharp increase in 1973, and again during the 1979 energy crisis. The orange line is adjusted for inflation.
Graph of oil prices from 1861-2007, showing a sharp increase in 1973, and again during the 1979 energy crisis. The orange line is adjusted for inflation.

Contents

Line at a gas station, June 15, 1979. ... Nominal value is the value of anything expressed in money of the day, versus real value which removes the effect of inflation. ...

Background

Founding of OPEC

The Organization of the Petroleum Exporting Countries (OPEC) consisted of twelve countries, including Iran, seven Arab countries, plus Indonesia, Nigeria, Angola and Venezuela. OPEC had been formed on September 14, 1960 at the Baghdad conference. It was made to protest pressure by major oil companies (mostly owned by U.S., British, and Dutch nationals) to reduce oil prices and payments to producers. At first it had operated as an informal bargaining unit for the sale of oil by Third World nations. It confined its activities to gaining a larger share of the revenues produced by Western oil companies and greater control over the levels of production. However, in the early 1970s it began to exert its strength.[citation needed] Arab States redirects here. ... is the 257th day of the year (258th in leap years) in the Gregorian calendar. ... Year 1960 (MCMLX) was a leap year starting on Friday (link will display full calendar) of the Gregorian calendar. ... Short-Term Oil Prices, 2005-2007 (not adjusted for inflation). ... For the Jamaican reggae band, see Third World (band). ...


Yom Kippur War

On October 6, 1973, Syria and Egypt launched a military attack on Israel starting the Yom Kippur War. [1] The persistence of the Arab-Israeli conflict finally triggered pressure on the West over its support of Israel (in part because of operations such as Operation Nickel Grass). Egypt and Syria, though not major oil-exporting countries, joined the latter grouping to help articulate its objectives. On October 17, 1973, Arab states placed an embargo on oil as punishment for U.S. support for Israel in the Yom Kippur War. [2] During the war the Arab world imposed an oil embargo against the United States, Western Europe, and Japan for their support of Israel. By the early 1970s the great Western oil conglomerates suddenly faced a unified bloc of producers. Combatants  Israel  Egypt,  Syria,  Iraq Commanders Moshe Dayan, David Elazar, Ariel Sharon, Shmuel Gonen, Benjamin Peled, Israel Tal, Rehavam Zeevi, Aharon Yariv, Yitzhak Hofi, Rafael Eitan, Abraham Adan, Yanush Ben Gal Saad El Shazly, Ahmad Ismail Ali, Hosni Mubarak, Mohammed Aly Fahmy, Anwar Sadat, Abdel Ghani el-Gammasy, Abdul Munim... Operation Nickel Grass was a strategic airlift operation conducted by the United States to deliver weapons and supplies to Israel during the Yom Kippur War. ...


The Arab-Israeli conflict triggered a crisis already in the making. The West could not continue to increase its energy use 5% annually, pay low oil prices, yet sell inflation-priced goods to the petroleum producers in the Third World. This was stressed by the Shah of Iran, whose nation was the world's second-largest exporter of oil and the closest ally of the United States in the Middle East at the time. "Of course [the world price of oil] is going to rise," the Shah told the New York Times in 1973. "Certainly! And how...; You [Western nations] increased the price of wheat you sell us by 300%, and the same for sugar and cement...; You buy our crude oil and sell it back to us, refined as petrochemicals, at a hundred times the price you've paid to us...; It's only fair that, from now on, you should pay more for oil. Let's say ten times more."[3] Shah or Shahzad is a Persian term for a monarch (ruler) that has been adopted in many other languages. ... A map showing countries commonly considered to be part of the Middle East The Middle East is a region comprising the lands around the southern and eastern parts of the Mediterranean Sea, a territory that extends from the eastern Mediterranean Sea to the Persian Gulf. ... The New York Times is an internationally known daily newspaper published in New York City and distributed in the United States and many other nations worldwide. ... Species T. aestivum T. boeoticum T. dicoccoides T. dicoccon T. durum T. monococcum T. spelta T. sphaerococcum T. timopheevii References:   ITIS 42236 2002-09-22 Wheat Wheat For the indie rock group, see Wheat (band). ... Pumpjack pumping an oil well near Sarnia, Ontario Petroleum (from Greek petra – rock and elaion – oil or Latin oleum – oil ) or crude oil is a thick, dark brown or greenish liquid. ... Petrochemicals are chemical products made from raw materials of petroleum (hydrocarbon) origin. ...


End of Bretton Woods

On August 15, 1971, the United States pulled out of the Bretton Woods Accord taking the US off the Gold Standard (whereby the value of the dollar had been pegged to the price of gold), allowing the dollar to "float". Shortly thereafter, Britain followed, floating the pound sterling. The industrialized nations followed suit with their respective currencies. In anticipation of the fluctuation of currencies as they stabilized against each other, the industrialized nations also increased their reserves (printing money) in amounts far greater than ever before. The result was a depreciation of the value of the US dollar, as well as the other currencies of the world. Because oil was priced in dollars, this meant that oil producers were receiving less "real" income for the same price. The OPEC cartel issued a joint communique stating that forthwith they would price a barrel of oil against gold. This led to the "Oil Shock" of the mid-seventies. In the years after 1971, OPEC was slow to readjust prices to reflect this depreciation. From 1947-1967 the price of oil in U.S. dollars had risen by less than two percent per year. Until the Oil Shock, the price remained fairly stable versus other currencies and commodities, but suddenly became extremely volatile thereafter. OPEC ministers had not developed the institutional mechanisms to update prices rapidly enough to keep up with changing market conditions, so their real incomes lagged for several years. The large price increases of 1973-74 largely caught up their incomes to Bretton Woods levels in terms of other commodities such as gold.[4] This article is about the day of the year. ... Year 1971 (MCMLXXI) was a common year starting on Friday (link will display full calendar) of the 1971 Gregorian calendar, known as the year of cyclohexanol. ... Wikipedia does not have an article with this exact name. ... For other uses, see Gold standard (disambiguation). ... Currency depreciation is the loss of value of a countrys currency with respect to one or more foreign reference currencies, typically in a floating exchange rate system. ... The United States dollar is the official currency of the United States. ...


Arab oil embargo

On October 16, 1973, OPEC cut production of oil and placed an embargo on shipments of crude oil to the West, with the United States and the Netherlands specifically targeted. The Netherlands had supplied arms to Israel and allowed the Americans to use Dutch airfields for supply runs to Israel. Also imposed was a boycott of Israel and price increases. Since oil demand falls little with price rises, prices had to rise dramatically to reduce demand to the new lower level of supply. Anticipating this, the market price for oil immediately rose substantially. A world financial system already under pressure from the breakdown of the Bretton Woods agreement was set on a path of a series of recessions and high inflation that persisted until the early 1980s, and elevated oil prices persisted until 1986. is the 289th day of the year (290th in leap years) in the Gregorian calendar. ... For the song by James Blunt, see 1973 (song). ... For delayed access after publication, see Embargo (academic publishing). ... In economics and business studies, the price elasticity of demand (PED) is an elasticity that measures the nature and percentage of the relationship between changes in quantity demanded of a good and changes in its price. ... Mount Washington Hotel The United Nations Monetary and Financial Conference, commonly known as Bretton Woods conference, was a gathering of 730 delegates from all 45 Allied nations at the Mount Washington Hotel, situated in Bretton Woods, New Hampshire to regulate the international monetary and financial order after the conclusion of...

The price of oil during the embargo. The graph is based on the nominal, not real, price of oil, and so overstates prices at the end. However, the effects of the Arab Oil Embargo are clear—it effectively doubled the real price of crude oil at the refinery level, and caused massive shortages in the U.S.
The price of oil during the embargo. The graph is based on the nominal, not real, price of oil, and so overstates prices at the end. However, the effects of the Arab Oil Embargo are clear—it effectively doubled the real price of crude oil at the refinery level, and caused massive shortages in the U.S.

Over the long term, the oil embargo changed the nature of policy in the West, towards more exploration, towards energy conservation, and towards more restrictive monetary policy, which more aggressively fought inflation. In economics, the distinction between nominal and real numbers is often made. ...


Chronology

{| style=float:right; |- | |- | |} is the 235th day of the year (236th in leap years) in the Gregorian calendar. ... For the song by James Blunt, see 1973 (song). ... Faisal ibn Abdelaziz Al Saud, King of Saudi Arabia (1324-1395 AH) (1903 or 1906—March 25, 1975) (Arabic: فيصل بن عبدالعزيز آل سعود) was King of Saudi Arabia from 1964 to 1975. ... Muhammad Anwar Al-Sadat (محمد أنورالسادات in Arabic) (December 25, 1918 – October 6, 1981) was an Egyptian politician and served as the third President of Egypt from September 28, 1970 until his assassination on October 6, 1981. ... Riyadh (Arabic: ar-Riyāḍ) is the capital and largest city of Saudi Arabia. ... is the 258th day of the year (259th in leap years) in the Gregorian calendar. ... The Organization of the Petroleum Exporting Countries (OPEC) is made up of Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela; since 1965, its international headquarters have been in Vienna, Austria. ... is the 279th day of the year (280th in leap years) in the Gregorian calendar. ... Yom Kippur (Hebrew:יוֹם כִּפּוּר , IPA: ), also known in English as the Day of Atonement, is the most solemn of the Jewish holidays. ... ... is the 281st day of the year (282nd in leap years) in the Gregorian calendar. ... is the 283rd day of the year (284th in leap years) in the Gregorian calendar. ... is the 289th day of the year (290th in leap years) in the Gregorian calendar. ... Abu Dhabi or Abu Zaby (Arabic language: أبوظبي) is the largest of the seven emirates that comprise the United Arab Emirates and was also the largest of the former Trucial States. ... is the 290th day of the year (291st in leap years) in the Gregorian calendar. ... is the 292nd day of the year (293rd in leap years) in the Gregorian calendar. ... is the 296th day of the year (297th in leap years) in the Gregorian calendar. ... is the 301st day of the year (302nd in leap years) in the Gregorian calendar. ... is the 309th day of the year (310th in leap years) in the Gregorian calendar. ... is the 327th day of the year (328th in leap years) in the Gregorian calendar. ... This article is about the former British colony of Southern Rhodesia, todays Zimbabwe. ... is the 331st day of the year (332nd in leap years) in the Gregorian calendar. ... Nixon redirects here. ... is the 343rd day of the year (344th in leap years) in the Gregorian calendar. ... is the 359th day of the year (360th in leap years) in the Gregorian calendar. ... Ahmed Zaki Yamani (Arabic: أحمد زكي يماني) (born June 30, 1930 in Mecca, Saudi Arabia) was Saudi Arabias Minister of Oil (Petroleum) and Mineral Resources from 1962 until 1986, and a minister in OPEC for 25 years. ... is the 7th day of the year in the Gregorian calendar. ... is the 9th day of the year in the Gregorian calendar. ... Year 1974 (MCMLXXIV) was a common year starting on Tuesday (link will display full calendar) of the 1974 Gregorian calendar. ... is the 91st day of the year (92nd in leap years) in the Gregorian calendar. ... is the 42nd day of the year in the Gregorian calendar. ... The United States Secretary of State is the head of the United States Department of State, concerned with foreign affairs. ... Henry Alfred Kissinger (born Heinz Alfred Kissinger on May 27, 1923) is a German-born American politician, and 1973 Nobel Peace Prize laureate. ... is the 43rd day of the year in the Gregorian calendar. ... is the 45th day of the year in the Gregorian calendar. ... is the 76th day of the year (77th in leap years) in the Gregorian calendar. ...

Immediate economic impact of the embargo

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Gas rationing system is announced in an afternoon newspaper being read at a service station with a sign in the background stating no gas is available in 1974
Gas rationing system is announced in an afternoon newspaper being read at a service station with a sign in the background stating no gas is available in 1974

The effects of the embargo were immediate. OPEC forced the oil companies to increase payments drastically. The price of oil quadrupled by 1974 to nearly US$12 per barrel (75 US$/m³).[6] Image File history File links Question_book-3. ... “bbl” redirects here. ...


This increase in the price of oil had a dramatic effect on oil exporting nations, for the countries of the Middle East who had long been dominated by the industrial powers were seen to have acquired control of a vital commodity. The traditional flow of capital reversed as the oil exporting nations accumulated vast wealth. Some of the income was dispensed in the form of aid to other underdeveloped nations whose economies had been caught between higher prices of oil and lower prices for their own export commodities and raw materials amid shrinking Western demand for their goods. Much was absorbed in massive arms purchases that exacerbated political tensions, particularly in the Middle East.


OPEC-member states in the developing world withheld the prospect of nationalization of the companies' holdings in their countries. Most notably, the Saudis acquired operating control of Aramco, fully nationalizing it in 1980 under the leadership of Ahmed Zaki Yamani. As other OPEC nations followed suit, the cartel's income soared. Saudi Arabia, awash with profits, undertook a series of ambitious five-year development plans, of which the most ambitious, begun in 1980, called for the expenditure of $250 billion. Other cartel members also undertook major economic development programs. Nationalization, also spelled nationalisation, is the act by which a nation takes possession of assets without requiring the owners consent, with or without payment of compensation. ... Saudi Aramco (Saudi Arabian Oil Company) is one of the largest oil companies in the world, and the largest in terms of production (bpd). ... Ahmed Zaki Yamani (Arabic: أحمد زكي يماني) (born June 30, 1930 in Mecca, Saudi Arabia) was Saudi Arabias Minister of Oil (Petroleum) and Mineral Resources from 1962 until 1986, and a minister in OPEC for 25 years. ...


Meanwhile, the shock produced chaos in the West. In the United States, the retail price of a gallon of gasoline rose from a national average of 38.5 cents in May 1973 to 55.1 cents in June 1974. Meanwhile, New York Stock Exchange shares lost $97 billion in value in six weeks.[citation needed] The New York Stock Exchange (NYSE), nicknamed the Big Board, is a New York City-based stock exchange. ...


With the onset of the embargo, U.S. imports of oil from the Arab countries dropped from 1.2 million barrels (190,000 m³) per day to 19,000 barrels (3,000 m³). Daily consumption dropped by 6.1% from September to February, and by 7% during summer of 1974, as the United States suffered its first fuel shortage since the Second World War.[citations needed] Mushroom cloud from the nuclear explosion over Nagasaki rising 18 km into the air. ...


Underscoring the interdependence of the world societies and economies, oil-importing nations in the noncommunist industrial world saw sudden inflation and economic recession. In the industrialized countries, especially the United States, the crisis caused the most hardship to the unemployed, the marginalized social groups, certain categories of aging workers, and increasingly, by younger workers.[citation needed] Schools and offices in the U.S. often closed down to save on heating oil; and factories cut production and laid off workers.[citation needed] In France, the oil crisis ended the Trente Glorieuses, 30 years of very high economic growth, and began the ensuing decades of permanent unemployment. The Trente Glorieuses (Thirty Glorious Years) were the years between 1945 (end of the Second World War) and 1974 (following the 1973 energy crisis) as seen from a French perspective. ... CIA figures for world unemployment rates, 2006 Unemployment is the state in which a person is without work, available to work, and is currently seeking work. ...


The embargo was not uniform across Europe. Of the nine members of the European Economic Community (EEC), the Dutch faced a complete embargo for their support of Israel, the United Kingdom and France received almost uninterrupted supplies (having refused to allow America to use their airfields and embargoed arms and supplies to both the Arabs and the Israelis), whilst the other six faced only partial cutbacks. The UK had traditionally been an ally of Israel, and Harold Wilson's government had supported the Israelis during the Six Day War, but his successor, Ted Heath, had reversed this policy in 1970, calling for Israel to withdraw to its pre-1967 borders. The members of the EEC had been unable to achieve a common policy during the first month of the Yom Kippur War. The Community finally issued a statement on November 6, after the embargo and price rises had begun; widely seen as pro-Arab, this statement supported the Franco-British line on the war and OPEC duly lifted its embargo from all members of the EEC. The price rises had a much greater impact in Europe than the embargo, particularly in the UK (where they combined with strike by coal miners to cause an energy crisis over the winter of 1973-74, a major factor in the change of government) [7] For other uses, see Europe (disambiguation). ... The European Community (EC), most important of three European Communities, was originally founded on March 25, 1957 by the signing of the Treaty of Rome under the name of European Economic Community. ... For other persons named Harold Wilson, see Harold Wilson (disambiguation). ... The 1967 Arab-Israeli War, also known as the Six-Day War or June War, was fought between Israel and its Arab neighbors Egypt, Jordan, and Syria. ... Sir Edward Richard George Heath, KG, OBE (9 July 1916 – 17 July 2005) was Prime Minister of the United Kingdom from 1970 to 1974 and leader of the Conservative Party from 1965 to 1975. ... is the 310th day of the year (311th in leap years) in the Gregorian calendar. ...


Despite being a target of the embargo as well, Japan fared particularly well in the aftermath of the world energy crisis of the 1970s compared to other oil-importing developed nations. Japanese automakers led the way in an ensuing revolution in car manufacturing. The large automobiles of the 1950s and 1960s were replaced by far more compact and energy efficient models. (Japan, moreover, had cities with a relatively high population density and a relatively high level of transit ridership.)[citations needed] Car redirects here. ... Ride theory is the sociological study of transportation systems, with a particular emphasis on amusement parks and carnival rides. ...


A few months later, the crisis eased. The embargo was lifted in March 1974 after negotiations at the Washington Oil Summit, but the effects of the energy crisis lingered on throughout the 1970s. The price of energy continued increasing in the following year, amid the weakening competitive position of the dollar in world markets.

Oregon gasoline dealers displayed signs explaining the flag policy in the winter of 1973-74
Oregon gasoline dealers displayed signs explaining the flag policy in the winter of 1973-74

Price controls and rationing

The crisis was further exacerbated by government price controls in the United States, which limited the price of "old oil" (that already discovered) while allowing newly discovered oil to be sold at a higher price, resulting in a withdrawal of old oil from the market and artificial scarcity. The rule had been intended to promote oil exploration.[8] This scarcity was dealt with by rationing of gasoline (which occurred in many countries), with motorists facing long lines at gas stations. In economics, incomes policies are wage and price controls used to fight inflation. ... Oil exploration is the search by petroleum geologists for hydrocarbon deposits beneath the Earths surface. ...


In the U.S., drivers of vehicles with license plates having an odd number as the last digit (or a vanity license plate) were allowed to purchase gasoline for their cars only on odd-numbered days of the month, while drivers of vehicles with even-numbered license plates were allowed to purchase fuel only on even-numbered days.[9] The rule did not apply on the 31st day of those months containing 31 days, or on February 29 in leap years — the latter never came into play, since the restrictions had been abolished by 1976. // Introduction A license plate, number plate or registration plate (often referred to simply as a plate, or colloquially tag) is a small metal or plastic plate attached to a motor vehicle for official identification purposes. ... A vanity plate (US), prestige plate, private number plate, personalised registration (UK) or personalised plate (Australia and New Zealand) is a special type of vehicle registration plate on an automobile or other vehicle. ... February 29 is a day added into a leap year of the Gregorian calendar. ... For the 1921 film starring Fatty Arbuckle, see Leap Year (film). ...


In some U.S. states, a three color flag system was used to denote gasoline availability at service stations. A green flag denoted unrationed sale of gasoline. A yellow flag denoted restricted and rationed sales. A red flag denoted that no gasoline was available at the service station but was open for other services.[10]


Coupons for gasoline rationing were ordered in 1974 and 1975 for Federal Energy Administration, but were never actually used for this crisis or the 1979 energy crisis. [11] Line at a gas station, June 15, 1979. ...


Conservation and reduction in demand

Gas coupon printed but not issued during the crisis
Gas coupon printed but not issued during the crisis

The U.S. government response to the embargo was quick but of limited effectiveness.[citation needed] A National Maximum Speed Limit of 55 mph (near 90 km/h) was imposed through the Emergency Highway Energy Conservation Act to help reduce consumption. President Nixon named William Simon as an official "energy czar," and in 1977, a cabinet-level Department of Energy was created, leading to the creation of the United States's Strategic Petroleum Reserve. The National Energy Act of 1978 was also a response to this crisis. Image File history File links Gasoline ration coupons were printed for emergency use (but never issued) during the energy crisis in 1979. ... Image File history File links Gasoline ration coupons were printed for emergency use (but never issued) during the energy crisis in 1979. ... 55 mph speed limit being erected in response to the National Maximum Speed Law. ... William Edward Simon (November 27, 1927–June 3, 2000) became the 63rd Secretary of the Treasury on May 8, 1974, during the Nixon administration. ... The United States Department of Energy (DOE) is a Cabinet-level department of the United States government responsible for energy policy and nuclear safety. ... The Strategic Petroleum Reserve (SPR) is an emergency petroleum store maintained by the United States Department of Energy. ... The National Energy Act of 1978 was a legislative response by the U.S. Congress to the 1973 energy crisis. ...


Year-round daylight saving time was implemented: at 2:00 a.m. local time on January 6, 1974, clocks were advanced one hour across the nation. The move spawned significant criticism because it forced many children to commute to school before sunrise. As a result, the clocks were turned back on the last Sunday in October as originally scheduled, and in 1975 clocks were set forward one hour at 2:00 a.m. on February 23. The pre-existing daylight-saving rules, calling for the clocks to be advanced one hour on the last Sunday in April, were restored in 1976. Although DST is common in Europe and North America, most of the worlds people do not use it. ... is the 6th day of the year in the Gregorian calendar. ... Year 1974 (MCMLXXIV) was a common year starting on Tuesday (link will display full calendar) of the 1974 Gregorian calendar. ... is the 54th day of the year in the Gregorian calendar. ...

Gas stations abandoned during the crisis were sometimes used for other purposes. This station at Potlatch, Washington was turned into a revival hall.
Gas stations abandoned during the crisis were sometimes used for other purposes. This station at Potlatch, Washington was turned into a revival hall.

The crisis also prompted a call for individuals and businesses to conserve energy — most notably a campaign by the Advertising Council using the tag line "Don't Be Fuelish." Many newspapers carried full-page advertisements that featured cut-outs which could be attached to light switches that had the slogan "Last Out, Lights Out: Don't Be Fuelish" emblazoned thereon. Image File history File links Potlatch_gas. ... Image File history File links Potlatch_gas. ... Potlatch is an unincorporated community in Mason County, Washington. ... Topics in Christianity Movements · Denominations · Other religions Ecumenism · Preaching · Prayer Music · Liturgy · Calendar Symbols · Art · Criticism Important figures Apostle Paul · Church Fathers Constantine · Athanasius · Augustine Anselm · Aquinas · Palamas · Luther Calvin · Wesley Arius · Marcion of Sinope Archbishop of Canterbury · Catholic Pope Coptic Pope · Ecumenical Patriarch Christianity Portal This box:      Revival in... The Advertising Council, commonly known as the Ad Council, is a private non-profit organization that distributes public service announcements on behalf of various sponsors, including both non-profit organizations and government agencies. ...


The U.S. "Big Three" automakers' first order of business after Corporate Average Fuel Economy (CAFE) standards were enacted was to downsize existing automobile categories as mandated by the U.S. Department of Transportation. By the end of the 1970s, full-size luxury cars with a 130-inch (3.3 m) wheelbase and gross weights averaging 4,500 pounds were a thing of the past. Before the mass production of automatic overdrive transmissions and electronic fuel injection, the traditional front engine/rear wheel drive layout was being phased out for the more efficient front engine/front wheel drive, starting with compact cars. Using the Volkswagen Rabbit as the archetype, much of Detroit went to front wheel drive after 1980 in response to CAFE's 27.5 mile per gallon fuel consumption mandate. The Corporate Average Fuel Economy (CAFE) regulations in the United States, first enacted by Congress in 1975,[1] are federal regulations intended to improve the average fuel economy of cars and light trucks (trucks, vans and sport utility vehicles) sold in the US in the wake of the 1973 Arab... This article or section does not cite its references or sources. ... The Volkswagen Golf (Mk1 and Mk5 badged as Volkswagen Rabbit in the United States and Canada, Mk1 badged as Volkswagen Caribe in Mexico) is a compact car/small family car manufactured by Volkswagen. ...


Though not required by legislation, the sport of auto racing voluntarily sought reductions. The 24 Hours of Daytona was cancelled in 1974. Also in 1974, NASCAR reduced all race distances by 10%. At the Indianapolis 500, qualifying was reduced from four days down to two, and several days of practice were eliminated.[citation needed] The Rolex 24 1/2 at Daytona (also frequently referred to as the 24 Hours of Daytona) is a 24-hour sports car endurance race held annually at Daytona International Speedway in Daytona Beach, Florida. ... Jeff Burton (99), Elliott Sadler (38), Ricky Rudd (21), Dale Jarrett (88), Sterling Marlin (40), Jimmie Johnson (48), and Casey Mears (41) practice for the 2004 Daytona 500 The National Association for Stock Car Auto Racing (NASCAR) is the largest sanctioning body of motorsports in the United States. ... Indy 500 redirects here. ...


Search for alternatives

The energy crisis led to greater interest in renewable energy and spurred research in solar power and wind power. It also led to greater pressure to exploit North American oil sources, and increased the West's dependence on coal and nuclear power. This included increased interest in mass transit and personal rapid transit, which do not use petroleum directly. Renewable energy effectively utilizes natural resources such as sunlight, wind, tides and geothermal heat, which are naturally replenished. ... Solar power describes a number of methods of harnessing energy from the light of the sun. ... An example of a wind turbine. ... North American redirects here. ... Coal Example chemical structure of coal Coal is a fossil fuel formed in ecosystems where plant remains were saved by water and mud from oxidization and biodegradation. ... Core of a small nuclear reactor used for research. ... In the United States of America, transit describes local area common carrier passenger transportation configured to provide scheduled service on fixed routes on a non-reservation basis. ... Personal rapid transit (PRT), also called personal automated transport (PAT) or podcar is a public transportation concept that offers automated on-demand non-stop transportation, on a network of specially-built guideways. ...


In Australia, heating oil ceased being considered an appropriate winter heating fuel. This often meant that a lot of oil-fired room heaters that were popular from the late-1950s to the early-1970s were considered outdated. Gas-conversion kits that let the heaters burn natural gas or propane were introduced. For other uses, see Natural gas (disambiguation). ... Propane is a three-carbon alkane, normally a gas, but compressible to a liquid that is transportable. ...


For the handful of industrialized nations that were net energy exporters, the effects of the oil crisis were very different. In Canada the industrial east suffered many of the same problems of the United States. In oil rich Alberta, however, there was a sudden and massive influx of money that quickly made it the richest province in the country. The federal government attempted to correct this imbalance through the creation of the government-owned Petro-Canada and later the National Energy Program. These efforts produced a great deal of anger in the west producing a sentiment of alienation that has remained a central element of Canadian politics to this day. Overall the oil embargo had a sharply negative effect on the Canadian economy. The economic malaise in the United States easily crossed the border and increases in unemployment, and stagflation hit Canada as hard as the United States despite Canadian fuel reserves. For other uses, see Alberta (disambiguation). ... Petro-Canada is a Canadian oil and gas firm headquartered in Calgary, Alberta. ... The National Energy Program (NEP) was an energy policy of the Government of Canada. ... Stagflation, a portmanteau of the words stagnation and inflation, is a term in general use within modern macroeconomics used to describe a period of out-of-control price inflation combined with slow-to-no output growth, rising unemployment, and eventually recession. ...


The Soviet Union was also a net oil exporter. The Soviet economy had stagnated for several years, and the increase in the price of oil had a beneficial effect, especially after the bloc's internal terms of trade were adjusted to reflect the increased value of Russian oil. The increase in foreign currency reserves allowed the import of grain and other foodstuffs from abroad, and increased production of consumer goods and kept military spending at its traditional levels. Some historians believe the windfall in oil revenues during this period kept the Soviet Union in existence for a considerably longer period of time than would otherwise have occurred.[citation needed] This article is part of the article History of the Comecon The Comprehensive Program for Socialist Economic Integration was a program set up in 1971, which laid the guidelines for Comecon activity through 1990 The distinction between market relations and planned relations made in the discussions within Comecon prior to...


The Brazilian government implanted a very large project called "Proálcool" (pro-alcohol) that would make a mixture of ethanol to gas for using in the vehicles. This project, focused on producing ethanol from sugar cane, is still ongoing and has reduced the oil importation needs of the country, and also has decreased the price of the gas in that nation. Grain alcohol redirects here. ...


Macroeconomic effects

The 1973 oil crisis was a major factor in Japan's economy shifting away from oil-intensive industries and resulted in huge Japanese investments in industries such as electronics. Surface mount electronic components Electronics is the study of the flow of charge through various materials and devices such as semiconductors, resistors, inductors, capacitors, nano-structures and vacuum tubes. ...


The Western nations' central banks decided to sharply cut interest rates to encourage growth, deciding that inflation was a secondary concern. Although this was the orthodox macroeconomic prescription at the time, the resulting stagflation surprised economists and central bankers, and the policy is now considered by some to have deepened and lengthened the adverse effects of the embargo. An interest rate is the rental price of money. ...


Long-term effects of the embargo are still being felt. Public suspicion of the oil companies, who were thought to be profiteering or even working in collusion with OPEC, continues (seven of the fifteen top Fortune 500 companies in 1974 were oil companies, with total assets of over $100 billion). The Fortune 500 is a ranking of the top 500 United States corporations as measured by gross revenue. ...


Effects on international relations

The Cold War policies of the Nixon administration also suffered a major blow in the aftermath of the oil embargo. They had focused on China and the Soviet Union, but the latent challenge to U.S. hegemony coming from the Third World became evident. U.S. power was under attack even in Latin America. For other uses, see Cold War (disambiguation). ... Latin America consists of the countries of South America and some of North America (including Central America and some the islands of the Caribbean) whose inhabitants mostly speak Romance languages, although Native American languages are also spoken. ...


The oil embargo was announced roughly just one month after a right-wing military coup in Chile toppled elected socialist president Salvador Allende on September 11, 1973. The United States' subsequent assistance to this government did little to curb the activities of socialist guerrillas in the region. The response of the Nixon administration was to propose doubling of the amount of military arms sold by the United States. As a consequence, a Latin American bloc was organized and financed in part by Venezuela and its oil revenues, which quadrupled between 1970 and 1975. Prisoners outside the La Moneda Palace after their surrender during the coup (1973). ... Salvador Isabelino Allende Gossens[1] (June 26, 1908 – September 11, 1973) was President of Chile from November 1970 until his death during the coup détat of September 11, 1973. ... is the 254th day of the year (255th in leap years) in the Gregorian calendar. ... For the song by James Blunt, see 1973 (song). ... Guerrilla redirects here. ...


In addition, Western Europe and Japan began switching from pro-Israel to more pro-Arab policies (some of which are still in effect today). This change further strained the Western alliance system, for the United States, which imported only 12% of its oil from the Middle East (compared with 80% for the Europeans and over 90% for Japan), remained staunchly committed to its backing of Israel.


A year after the unveiling of the 1973 oil embargo, the nonaligned bloc in the United Nations passed a resolution demanding the creation of a "new international economic order" in which resources, trade, and markets would be distributed more equitably, with the local populations of nations within the global South receiving a greater share of benefits derived from the exploitation of southern resources, and greater respect for the right to self-directed development in the South be afforded by the North. UN redirects here. ...


Decline of OPEC

Further information: 1980s oil glut
OPEC net oil export revenues for 1971 - 2007.
OPEC net oil export revenues for 1971 - 2007.[12]

Since 1973, OPEC failed to hold on to its preeminent position, and by 1981, its production was surpassed by that of other countries. Additionally, its own member nations were divided among themselves. Saudi Arabia, trying to gain back market share, increased production and caused downward pressure on prices, making high-cost oil production facilities less profitable or even unprofitable. The world price of oil, which had reached a peak in 1979 during the 1979 energy crisis, at more than US$80 per barrel, decreased during the early 1980s to US$38 per barrel (239 US$/m³). In real prices, oil briefly fell back to pre-1973 levels. Overall, the reduction in price was a windfall for the oil-consuming nations: United States, Japan, Europe and especially the Third World. Line at a gas station, June 15, 1979. ...


Part of the decline in prices and economic and geopolitical power of OPEC comes from the move away from oil consumption to alternate energy sources. OPEC had relied on the famously limited price sensitivity of oil demand to maintain high consumption but had underestimated the extent to which other sources of supply would become profitable as the price increased. Electricity generation from nuclear power and natural gas, home heating from natural gas and ethanol blended gasoline all reduced the demand for oil. In economics and business studies, the price elasticity of demand (PED) is an elasticity that measures the nature and percentage of the relationship between changes in quantity demanded of a good and changes in its price. ... This article is about applications of nuclear fission reactors as power sources. ... For other uses, see Natural gas (disambiguation). ... Grain alcohol redirects here. ...


At the same time, the drop in prices represented a serious problem for oil-producing countries in northern Europe and the Persian Gulf region. For a handful of heavily populated, impoverished countries, whose economies were largely dependent on oil — including Mexico, Nigeria, Algeria, and Libya — governments and business leaders failed to prepare for a market reversal, the price drop placed them in wrenching, sometimes desperate situations. Map of the Persian Gulf. ...


When reduced demand and over-production produced a glut on the world market in the mid-1980s, oil prices plummeted and the cartel lost its unity. Oil exporters such as Mexico, Nigeria, and Venezuela, whose economies had expanded in the 1970s, were plunged into near-bankruptcy, and even Saudi Arabian economic power was significantly weakened. The divisions within OPEC made subsequent concerted action more difficult.


Nevertheless, the 1973 oil shock provided dramatic evidence of the potential power of Third World resource suppliers in dealing with the developed world. The vast reserves of the leading Middle East producers guaranteed the region its strategic importance, but the politics of oil still proves dangerous for all concerned to this day. Political sidewalk graffiti Petroleum politics have been an increasingly important aspect of international diplomacy since the discovery of oil in the Middle East in the early 1900s. ...


Long term effects

Despite efforts by the Arab states to use the "oil weapon" to display Western energy vulnerability and the futility of maintaining a heavy-handed pro-Israeli policy, it can be argued that the Arab states ultimately traded diplomatic gains for ever-increasing dependence on the West for economic and military security. The sharp reaction by the United States, Western Europe and Japan, the Soviet Union, and the influx of new oil wealth, had dire effects for the Arab states in the years following the 1973 Yom Kippur War and OPEC embargo. Prior to the embargo, the geo-political competition between the Soviet Union and the United States, in combination with low oil prices that hindered the necessity and feasibility for the West to seek alternative energy sources, presented the Arab States with financial security, moderate economic growth, and disproportionate international bargaining power.[13] Following the embargo, higher oil prices opened new avenues for energy exploration or expansion including Alaska, the North Sea, the Caspian Sea, and Caucasus.[14] For other uses, see Alaska (disambiguation). ... The North Sea is a sea of the Atlantic Ocean, located between the coasts of Norway and Denmark in the east, the coast of the British Isles in the west, and the German, Dutch, Belgian and French coasts in the south. ... The Caspian Sea is the largest enclosed body of water on Earth by area, variously classed as the worlds largest lake or a full-fledged sea. ... It has been suggested that this article or section be merged with Caucasus Mountains. ...


Soviet reaction

Prior to the ascendence of Mohammed Anwar Al Sadat to president of Egypt in 1970, the Middle East had been an important arena in the global superpower competition, most lucidly displayed in the arms sales and cooperation between the American and Soviet governments with Israel, Saudi Arabia, and Iran on one hand and Egypt, Syria, and Iraq on the other. Although none of these states entered into any formal alliances comparative to the North Atlantic Treaty Organization, they did benefit greatly from the geo-political competition in the region and vacillations in alignment often resulted in greater gains of assistance. This competitive environment, beneficial to the regional states involved, was mitigated sharply after 1970. Sadat's dismissal of Soviet specialists in Egypt and the dramatic price increases in hydrocarbons hardened relations with all of the Middle East and created new opportunities for the export of Soviet oil. Exploration in the Caspian Basin and Siberia became more cost effective. Former cooperation evolved into a far more adversarial relationship as the Soviet Union increased oil production and export (by 1980 the Soviet Union was the world's largest producer of oil) to take advantage of the supply problems in the West created by OPEC's production reductions.[15][16] This growing economic competition turned into genuine fears of military aggression after the 1979 Soviet invasion of Afghanistan, leaving the Gulf States to look to the United States for the type of security guarantees against Soviet military action in the Persian Gulf that the Israelis had exclusively received only a decade earlier. Field Marshal Mohammed Anwar Al Sadat (Arabic:محمد أنورالسادات) in (December 25, 1918 – October 6, 1981) was an Egyptian soldier and politician, who served as the third President of Egypt from October 15, 1970 until his assassination on October 6, 1981. ... NATO 2002 Summit The North Atlantic Treaty Organisation (NATO), sometimes called North Atlantic Alliance, Atlantic Alliance or the Western Alliance, is an international organisation for defence collaboration established in 1949, in support of the North Atlantic Treaty signed in Washington, DC, on April 4, 1949. ... This article is about Siberia as a whole. ... Belligerents DRA USSR Mujahideen of Afghanistan Commanders Soviet 40th Army: Sergei Sokolov Valentin Varennikov Boris Gromov DRA: Babrak Karmal Mohammad Najibullah Abdul Rashid Dostum Abdul Haq Jalaluddin Haqqani Gulbuddin Hekmatyar Ismail Khan Ahmad Shah Massoud Strength Soviet forces: 80,000-104,000 Afghan forces: 329,000 (in 1989)[1] 45...


Growing security concerns

The Soviet invasion of Afghanistan was only part of the growing security destabilization in the Middle East, most obviously seen in the increased sale of American weapons, technology, and outright military presence. Saudi Arabia and Iran became increasingly dependent on bi-lateral American security assurances to combat both external and internal threats, including increased military competition between these states because of the increased oil revenues. Both states were seemingly competing for preeminence in the Persian Gulf and using increased revenues on disproportionately powerful military forces. By 1979, Saudi weapon purchases from the United States was in excess of five times the amount that Israel was purchasing annually.[17] Following the failure of the Shah during January 1979 to maintain control of Iran, the Saudis were forced to deal with the prospect of internal destabilization via Islamic fundamentalism, a reality which would quickly be revealed in the seizure of the Grand Mosque in Mecca by Wahhabi extremists during November and a Shia revolt in al-Hasa during December.[18][19] Map of the Persian Gulf. ... This article does not cite any references or sources. ... This article is about the city in Saudi Arabia. ... Wahhabism (sometimes spelled Wahabbism or Wahabism) is a movement of Islam named after Muhammad ibn Abd al Wahhab (1703–1792). ...


Conclusions

Growing fears about eventual Western energy independence, various security threats, and the absence of a Western rival in the geo-political competition over the Middle-East led the Arab states in a more dependent relationship with the West. This is most explicit in Saudi Arabia's consistent policy of price and production moderation in an effort to reduce the chances of Western alienation and the opportunity costs for alternative energy production.[20] The exchange for Western moderation in Arab-Israeli affairs ultimately led to a reshaping of the Middle-Eastern geo-political landscape that was significantly less advantageous than prior to 1973.


Impact on motor industry

Impact on West European motor industry

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The motor industry was one of Western Europe's most affected industries in the wake of the 1973 oil crisis. Image File history File links Question_book-3. ...


After the Second World War most West European countries applied heavy taxes to motor fuel because it was imported, and as a result most cars made in Europe were small and economical. However by the late sixties as wealth increased car sizes were rising despite heavy fuel taxes, although some of the more upmarket brands were building cars that could take lead-free fuel, and there were still a number of "economy" cars in production at this time. Gasoline, as it is known in North America, or petrol, in many Commonwealth countries (sometimes also called motor spirit) is a petroleum-derived liquid mixture consisting primarily of hydrocarbons, used as fuel in internal combustion engines. ...


But the oil crisis gradually saw many West European car buyers move away from larger, less economical cars. The most notable result of this transition in the car market was the rise in popularity of compact hatchbacks.


The only notable small hatchbacks built in Western Europe at the time of the oil crisis were the Peugeot 104, Renault 5 and Fiat 127. By the end of the decade, the market had massively expanded with the introduction of the Ford Fiesta, Vauxhall Chevette (sold as the Opel Kadett City in West Germany), Chrysler Sunbeam and Citroen Visa. The Peugeot 104 was a supermini automobile produced by the french manufacturer Peugeot between 1972 and 1988. ... The Renault 5 (also called the R5) is a supermini produced by the French automaker Renault in two generations between 1972 and 1996. ... The Fiat 127 was a supermini automobile produced by the Italian manufacturer Fiat between 1971 and 1987. ... The Ford Fiesta is a mid-class supermini car designed and built by the Ford Motor Company in Europe, and also manufactured in Brazil, Mexico, Venezuela, China, India and South Africa. ... Vauxhall Chevette - rare HSR rally model in road-going trim The Vauxhall Chevette was a model of car manufactured by Vauxhall in the UK from 1975 to 1983. ... The Opel Kadett is a small family car produced by the German automaker Opel between 1937 and 1940, then from 1962 to 1992. ... The Hillman Avenger is a sub-compact car manufactured by the Rootes Group, and latterly Chrysler Europe. ... The Citroën Visa is a small, roomy, light, 5-door car produced by Citroën from 1978 to 1988. ...


Buyers looking for larger cars were increasingly drawn to medium sized hatchbacks that were virtually unknown in Europe in 1973, but by the end of the decade were gradually replacing saloons as the mainstay of this sector. Between 1973 and 1980, the following medium sized hatchbacks were launched across Europe: the Chrysler/Simca Horizon, Fiat Ritmo (Strada in the UK), Ford Escort MK3, Renault 14, Vauxhall Astra (also sold as the Opel Kadett) and Volkswagen Golf. These cars offered new standard of fuel economy, which were much needed in the aftermath of the oil crisis. The Horizon is a subcompact hatchback automobile, designed by the European division of Chrysler from 1977. ... This article is about the Fiat Ritmo (Strada). ... The Ford Escort was a compact car manufactured by the Ford Motor Company from 1967 through 2003. ... The Renault 14 was an automobile produced by Renault of France between 1976 and 1983. ... Vauxhall Astra is a model-name which has been used by Vauxhall, the British subsidiary of General Motors (GM), on their small family car ranges since 1979. ... The Opel Kadett is a small family car produced by the German automaker Opel between 1937 and 1940, then from 1962 to 1992. ... The Volkswagen Golf (Mk1 and Mk5 badged as Volkswagen Rabbit in the United States and Canada, Mk1 badged as Volkswagen Caribe in Mexico) is a compact car/small family car manufactured by Volkswagen. ...


The modern hatchbacks launched in the wake of the oil crisis were considerably more economical than the traditional saloons they were taking the place of, and even attracted a considerable number of buyers who would have otherwise chosen cars in the next sector. Their success continued into the 1980s and by the later part of the decade, some 15 years after the oil crisis, hatchbacks almost monopolised most European small and medium car markets, and had gained a substantial share of the large family car market.


Impact on U.S. motor industry

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Please help improve this section by adding citations to reliable sources. Unverifiable material may be challenged and removed.

Like Western Europe, Detroit was significantly impacted by the 1973 oil embargo. Before the embargo American cars got bigger and thirstier each year. V8 engines got bigger, the cars got longer wheelbases, and more and more power and convenience features added weight and sapped power. By 1971 the standard engine in a Chevrolet Caprice was a 400-cubic inch V8, and most came with power windows, seats, and air conditioning. The wheelbase of this car was a long 121.5 inches (3,090 mm), and Motor Trend's 1972 test of the similar Chevrolet Impala could not yield more than 15 miles per gallon, even on the highway. However, after the oil embargo, these big behemoths sat on dealers' lots week after week, month after month, without being sold while the newly-introduced four-cylinder subcompacts and six-cylinder compacts were in greater demand than the supply. In addition, Japanese and European automakers began to export more compact cars into the US than ever before to meet the demand. Toyota become a top seller in a short time due to the superior quality of their models. Nissan (Datsun prior to 1984)), Peugeot, Volkswagen, Mazda and Honda also racked up record sales in the US during this period. Image File history File links Question_book-3. ...


This forced the Big Three (GM, Ford, and Chrysler) to introduce smaller and fuel-efficient models for domestic sales. The Chrysler Omni/Horizon, Ford Fiesta and Fairmont, and the Chevrolet Chevette all had four-cylinder engines and room for at least four passengers by the late seventies. But Toyota, Honda, and Nissan had by that time captured the market to a great degree with their improved, front-wheel drive models that offered more for the money and better fuel mileage than their American competitors.


The February 2008 issue of Collectible Automobile magazine contained an article titled "