By the early 1970s, American oil consumption—in the form of gasoline and other products—was rising even as domestic oil production was declining, leading to an increasing dependence on oil imported from abroad. Despite this, Americans worried little about a dwindling supply or a spike in prices, and were encouraged in this attitude by policymakers in Washington, who believed that Arab oil exporters couldn’t afford to lose the revenue from the U.S. market. These assumptions were demolished in 1973, when an oil embargo imposed by members of the Organization of Arab Petroleum Exporting Countries (OAPEC) led to fuel shortages and sky-high prices throughout much of the decade. Background to the 1970s Energy Crisis In 1948, the Allied powers had carved land out of the British-controlled territory of Palestine in order to create the state of Israel, which would serve as a homeland for disenfranchised Jews from around the world. Much of the Arab population in the region refused to acknowledge the Israeli state, however, and over the next decades sporadic attacks periodically erupted into full-scale conflict. One of these Arab-Israeli wars, the Yom Kippur War, began in early October 1973, when Egypt and Syria attacked Israel on the Jewish holy day of Yom Kippur. After the Soviet Union began sending arms to Egypt and Syria, U.S. President Richard Nixon began an effort to resupply Israel. Did you know? The United States alone consumes about 20 million of the roughly 100 million barrels of oil consumed daily in the world. In response, members of the Organization of Arab Petroleum Exporting Countries (OAPEC) reduced their petroleum production and proclaimed an embargo on oil shipments to the United States and the Netherlands, the main supporters of Israel. Though the Yom Kippur War ended in late October, the embargo and limitations on oil production continued, sparking an international energy crisis. As it turned out, Washington’s earlier assumption that an oil boycott for political reasons would hurt the Persian Gulf financially turned out to be wrong, as the increased price per barrel of oil more than made up for the reduced production.
