The Past Three Decades: Years of Crisis - Years of Triumph
|Digital History ID 3358|
Political unrest in the oil-rich Middle East contributed significantly to America's economic troubles. After suffering a humiliating defeat at the hands of Israel in the 1973 Yom Kippur War, Arab leaders unsheathed a new political weapon--oil. In order to pressure Israel out of territory conquered in the 1967 and 1973 wars, Arab nations cut oil production 25 percent and embargoed all oil exports to the United States. Leading the way was OPEC, founded by Iran, Saudi Arabia, and Venezuela in 1960 to fight a reduction in prices by oil companies.
Because Arab nations controlled 60 percent of the oil reserves in the non-Communist world, they had the Western nations over a barrel. Production cutbacks produced an immediate global shortage. The United States imported a third of its oil from Arab nations; Western Europe imported 72 percent from the Middle East; Japan, 82 percent. Gas prices rose, long lines formed at gas pumps, some factories shortened the work week, and some shopping centers restricted business hours.
The oil crisis brought to an end an era of cheap energy. Americans had to learn to live with smaller cars and less heating and air conditioning. But the crisis did have a positive side effect. It increased public consciousness about the environment and stimulated awareness of the importance of conservation. For millions of Americans the lessons were painful to learn.