Please pull out a scratch piece of paper In one minute I want you to make a list of ALL of the things you can think of that wouldn’t be possible without oil……GO!

Oil Crisis of 1973

Background Major oil producing countries of the world formed OPEC in 1960 – Organization for Petroleum Exporting Countries – Many Arab (Middle Eastern) countries were a part of OPEC (and still are) – OPEC wanted to have more control over the oil market (mainly the price of oil)

OPEC Nations

Yum Kippur War Syria and Egypt (Arab countries) attacked Israel to take back the land for Arab people The United States supported Israel with weapons and supplies In response, the Arab countries in OPEC decided to place an embargo on oil to the U.S. – Refusal to sell goods

Impact on the U.S. Price of oil went from $3 a barrel in 1972 to $12 in 1973 (quadrupled!) – In today’s money that’s the equivalent of going from $15.97 a barrel to $63.86 Created massive gasoline shortages across the country – Led to huge waiting lines for gasoline Inflation skyrocketed as gas prices went up – The price of almost everything is dependent on oil

U.S. Response U.S. came up with several ways to manage the crisis – Oil rationing Only certain cars could get gas on certain days – Reduced speed limits – Year-round daylight savings

Other Side-Effects of the Crisis NASCAR reduced all of its races by 10% to save on fuel Muscle cars began to be phased out

Embargo Lifted Arab nations of OPEC ended the embargo in 1974 after diplomatic discussions with the U.S. Damage had been done – High gas prices were here to stay!

Quick Review 1.Why did several countries create OPEC? – To control the oil market 2.Why did the Arab countries of OPEC place an oil embargo against the U.S.? – The U.S. was supplying Israel with weapons in the war against Egypt and Syria 3.How did the embargo affect the U.S.? – Long lines for gas (shortages), high gas prices, jump in inflation 4.How did the U.S. respond to the crisis? – Rationed oil, reduced speed limits, year-round daylight savings