The causes and consequences of the 1973 oil crisis are still hotly debated among historians. What is known for sure is that this crisis hit the automotive industry in Western countries very hard. The 1973 oil crisis hit America particularly hard.
By the end of the embargo in March 1974, the price of oil rose from $3. US per barrel to almost 12 dollars. USA on a global scale. Prices in the US were much higher. The embargo triggered an oil crisis or "shock" with many short and long term implications for global politics and the world economy. It was later called the "first oil shock", followed by the 1979 oil crisis, called the "second oil shock".
How it was
By 1969, US domestic oil output could not keep up with rising demand. In 1925, oil accounted for one-fifth of American energy consumption. By the time World War II began, a third of America's energy needs were met by oil. She began to replace coal aspreferred source of fuel - it was used to heat houses and generate electricity, and it was the only fuel that could be used for air transport. In 1920, American oil fields accounted for nearly two-thirds of the world's oil production. In 1945, US production increased to nearly two-thirds. The US was able to meet its own energy needs on its own during the decade between 1945 and 1955, but by the end of the 1950s it was importing 350 million barrels a year, mostly from Venezuela and Canada. In 1973, US production dropped to 16.5% of the total. It was one of the consequences of the 1973 oil crisis.
Oil confrontation
Oil production costs in the Middle East have been low enough for companies to turn a profit despite US duties on oil imports. This hurt domestic producers in places like Texas and Oklahoma. They were selling oil at tariff prices, and now they had to compete with cheap oil from the Persian Gulf region. Getty, Standard Oil of Indiana, Continental Oil, and Atlantic Richfield were the first American firms to capitalize on the low cost of production in the Middle East. Eisenhower said in 1959, "As long as the oil of the Middle East remains as cheap as it is, there is probably little we can do to reduce Western Europe's dependence on the Middle East." All this would later lead to the 1973 oil crisis.
After all, at the request of independentAmerican producers Dwight D. Eisenhower imposed quotas on foreign oil, which remained at the level between 1959 and 1973. Critics called it a policy of "draining America first". Some scholars believe that the policy contributed to the decline in US oil production in the early 1970s. While US oil production declined, domestic demand increased, leading to inflation and a steadily rising consumer price index between 1964 and 1970.
Other consequences
The oil crisis of 1973 was preceded by many events. The US trade surplus declined from 4 million barrels per day to 1 million barrels per day between 1963 and 1970, which increased the US dependence on foreign oil imports. When Richard Nixon took office in 1969, he assigned George Schultz to head a committee to review Eisenhower's quota program-the Schulz committee recommended that quotas be abolished and replaced with duties, but Nixon decided to keep the quotas due to active political opposition. In 1971, Nixon capped the price of oil as demand for oil increased and production declined, increasing dependence on foreign oil imports as consumption was bolstered by low prices. In 1973, Nixon announced the end of the quota system. Between 1970 and 1973, US crude oil imports nearly doubled, reaching 6.2 million barrels per day in 1973.
Continuation of the embargo
The embargo continued from October 1973to March 1974. Since Israeli forces did not reach the 1949 armistice line, most scholars believe that the embargo was a failure. Roy Licklider, in his 1988 books "Political Power" and "Arab Oil Weapons", concluded that it was a failure because the countries targeted by it did not change their policies regarding the Arab-Israeli conflict. Licklider believed that any long-term changes were due to OPEC's increase in the posted price of oil, and not the embargo on the OAO. On the other hand, Daniel Yergin said the embargo would "remake the international economy."
Severe consequences
In the long term, the oil embargo has changed the nature of policy in the West towards increased research, alternative energy research, energy conservation and more restrictive monetary policy to better fight inflation. The financiers and economic analysts were the only ones who really understood the system of the 1973 oil crisis.
This price increase has had a significant impact on oil-exporting countries in the Middle East, which have long been dominated by industrial powers believed to have taken control of a vital commodity. Oil-exporting countries have begun to accumulate enormous we alth.
The role of charity and the threat of Islamism
Some of the proceeds were distributed in the form of aid to other underdeveloped countries whose economies were more affectedhigh oil prices and lower prices for its own exports against the backdrop of reduced demand for the West. Much went into arms purchases, which exacerbated political tensions, especially in the Middle East. In the decades that followed, Saudi Arabia spent more than $100 billion to help spread the fundamentalist interpretation of Islam known as Wahhabism around the world, through religious charities such as the Al-Haramain Foundation, which often also distributed funds to violent Sunni extremist groups. such as Al-Qaeda and the Taliban.
A blow to the auto industry
The increase in imported cars in North America has forced General Motors, Ford and Chrysler to introduce smaller, more economical models for domestic sales. Chrysler's Dodge Omni/Plymouth Horizon, Ford Fiesta, and Chevrolet Chevette had four-cylinder engines and were intended for at least four passengers by the late 1970s. By 1985, the average American car had moved 17.4 miles per gallon, up from 13.5 in 1970. The improvements remained, although the price of a barrel of oil remained constant at US$12 from 1974 to 1979. Sales of large sedans for most car brands (with the exception of Chrysler products) recovered during the two model years of the 1973 crisis. Cadillac DeVille and Fleetwood, Buick Electra, Oldsmobile 98, Lincoln Continental, Mercury Marquis and moreluxury-oriented sedans became popular again in the mid-1970s. The only full-size models that were not restored were lower priced models such as the Chevrolet Bel Air and Ford Galaxie 500. Few models such as the Oldsmobile Cutlass, Chevrolet Monte Carlo, Ford Thunderbird and others sold well.
Economical imports were accompanied by big, expensive cars. In 1976, Toyota sold 346,920 vehicles (average weight about 2,100 pounds) and Cadillac sold 309,139 cars (average weight about 5,000 pounds).
Automotive revolution
Federal safety standards such as NHTSA Federal Safety 215 (pertaining to protective bumpers) and compact units such as the 1974 Mustang I were a prelude to DOT's "downsizing" vehicle category revisions. By 1979, virtually all "full-size" American cars had shrunk, with smaller engines and smaller exterior dimensions. Chrysler ended production of full-size luxury sedans in late 1981, moving to an all-wheel drive auto line for the rest of 1982.
The causes of the oil crisis were not limited to US oil embargoes. After World War II, most Western European countries imposed duties on motor fuel imports, and as a result, most cars made in Europe were smaller and more fuel efficient than their American counterparts. By the end of the 1960sIncome growth supported car size growth.
The oil crisis turned Western European buyers away from bigger, less efficient cars. The most notable result of this transition was the rise in popularity of compact hatchbacks. The only notable small hatchbacks built in Western Europe before the oil crisis were the Peugeot 104, Renault 5 and Fiat 127. By the end of the decade, the market expanded with the introduction of the Ford Fiesta, Opel Kadett (marketed as the Vauxhall Astra in the UK), Chrysler Sunbeam and Citroën Visa. It seems that the mass transition of the population to compact cars was the only way to solve the oil crisis of 1973.
