winters ago, the world was jolted to find how important oil is in
153 days of turmoil and uncertainty in the dark winter of 1973-74
that changed the world.
the time of "The Embargo."
oil prices had risen to a whopping $3 a barrel, up from an average
of $2.48 the year before. From 1961-70, the average price was $1.80
States was importing about 35 percent of its energy needs, and U.S.
petroleum reserves were depleting due to years of nonchalance toward
a taken-for-granted industry providing petroleum at bubble gum prices.
of Petroleum Exporting Countries (OPEC), a cartel formed in the
1960s to present a common front to negotiate its interests with
the giant oil companies, was little known outside the oil industry.
As oil demand increased in the industrial world faster than production
over the decade, OPEC was growing stronger, working more closely
together and became more determined to increase its share of the
the post-Vietnam War Western world was in the midst of an inflationary
spiral economy. Consumer prices were rising at an over-8 percent
clip in the United States and double-digits in some other countries.
In an attempt
to manage the economy, U.S. President Richard Nixon extended price
controls to oil in March 1973 due to "rising oil costs."
his own troubles, too, with the investigation of the Watergate break-in
hell broke loose.
6, 1973, the Jewish holy day of Yom Kippur, Egyptian forces attacked
Israel in a surprise offensive from across the Suez Canal, while
Syrian troops attacked the Golan Heights.
with help in the form of supplies from the United States and the
Netherlands quickly reversed the Arab gains. That enraged some of
the members of OPEC.
was to come.
17 winter was embracing the Northern Hemisphere. That day, the "oil
weapon" card was played.
an oil embargo on the United States and the Netherlands while increasing
prices by 70 percent to America's western Europe allies.
news broke three days later — the same day as the "Saturday Night
Massacre," where in a matter of hours two successive U.S. attorneys
general resigned before the third successor, Robert Bork, dismissed
Watergate prosecutor Archibald Cox on Nixon's demand.
and economic shock waves were immediate. The price of oil doubled
overnight — and rose to $11.65 a barrel in January 1974.
was not happy.
along with their European brethren, switched to full-bitch mode
as petrol prices began to rise almost immediately from as low as
30 cents per gallon to $1.20 or more at the height of the crisis.
The hikes exacerbated the already difficult inflation problem.
little storage and transportation infrastructure were especially
hard-hit, and conspiracy theories abounded. One of the favorites
was that major oil importers were supposedly secretly raking in
the profits, and that tankers loaded with oil were waiting at sea
for the prices to rise before docking.
these theories were proved untrue. But it was still another unfair
black eye for the industry.
poll found that the public was "fearful that the country had run
out of energy," and that the oil companies were using the gasoline
shortage as an excuse for unfairly raising prices. After all, in
the acrimonious atmosphere, who is going to believe a rational —
usually statistical — explanation from the oil industry?
of motorists waiting to top off their tanks was the most vivid picture
of the time. None were smiling.
Nixon made a major address to a fearful nation. He proposed, among
other things, an extension of daylight-saving time, a ban on the
sale of petrol on Sundays, 55 mile-per-hour speed limits, carpooling
and turning down thermostats.
As a gesture,
the lights of the White House Christmas tree were dark that season.
Petrol rationing stamps were printed — just in case.
said, "Let us set as our national goal in the spirit of Apollo,
with the determination of the Manhattan Project, that by the end
of this decade we will have developed the potential to meet our
own energy need without depending on any foreign energy source."
know how that one turned out.
rising frustration, animosity and near panic, the biggest legislative
initiative came on Nov. 13, when Congress approved the proposed
Trans-Alaskan oil pipeline, designed to supply two million barrels
a day from Prudhoe Bay, discovered in 1968 but frozen idle due to
prices for crude stimulated development activity in every country
that had any production potential. Also, petroleum geologists became
very much in demand and universities ramped up their programs and
a new generation of explorers entered the business.
years, but ultimately old fields were expanded and new ones discovered
and brought online. The global supply of crude was dramatically
approached in the Northern Hemisphere, OPEC, with point proved,
officially ended the embargo on March 18, 1974.
was a harrowing 153 days of an economic sea change of thinking that
end of 1974, the Dow was at 577, down from 962 in November 1973
— a 40 percent drop.
1974 some of the other happenings in the changing zeitgeist included:
- Nixon resigned —
and was shortly thereafter pardoned.
- Patty Hearst was
- Streaking — running
naked for a few moments in a public place — became a fad.
- Muhammad Ali knocked
out George Foreman to regain his heavyweight boxing title.
- "The Towering Inferno"
and "Blazing Saddles" were the top grossing movies.
- The number one song
of 1974 was Barbara Streisand's "The Way We Were."
The Embargo, we weren't going to be the way we were again.