The oil crisis 1973 began in October 1973 when members of the Organization of Petroleum Exporting Countries of Arabia proclaimed an oil embargo. The embargo was targeted at countries deemed supportive of Israel during the Yom Kippur War. The initial targeted countries were Canada, Japan, the Netherlands, the United Kingdom and the United States with an embargo also later expanded to Portugal, Rhodesia and South Africa. At the end of the March 1974 embargo, oil prices rose from US $ 3 per barrel to nearly $ 12 globally; US prices are significantly higher. The embargo creates an oil crisis, or "shock," with many short-term and long-term effects on global politics and the global economy. This was then called the "first oil shock", followed by the 1979 oil crisis, called the "second oil shock."
Video 1973 oil crisis
Summary
The embargo was a response to US involvement in the 1973 Yom Kippur War. Six days after Egypt and Syria launched a staggering military campaign against Israel, the United States supplied Israel with weapons. In response to this, the Organization of Arab Petroleum Exporting Countries (OAPEC, which consists of members of Arab Opec plus Egypt and Syria) announces an oil embargo on Canada, Japan, the Netherlands, the United Kingdom and the United States.
The crisis has had a major impact on international relations and created a rift in NATO. Some European and Japanese countries are trying to secede from US foreign policy in the Middle East not to be targeted by a boycott. Arab oil producers link future policy changes to peace between warring parties. To counter this, the Nixon Government initiated multilateral negotiations with combatants. They arranged for Israel to withdraw from the Sinai Peninsula and the Golan Heights. On January 18, 1974, US Secretary of State Henry Kissinger had negotiated the withdrawal of Israeli troops from parts of the Sinai Peninsula. The negotiated settlement promise between Israel and Syria was enough to convince Arab oil producers to lift the embargo in March 1974.
Independently, OAPEC members agreed to use their leverage on the world's pricing mechanism for oil to stabilize their revenues by raising world oil prices after the failure of negotiations with Western oil companies recently.
The embargo comes at a time of rising petroleum consumption by industrialized countries and coincides with a sharp increase in oil imports by the world's largest oil consumer, the United States. As a result, targeted countries initiate various policies to withhold their future dependency.
The 1973 "oil price shock", with an accompanying 1973-74 stock market crash, was considered the first discrete event since the Great Depression to have a persistent effect on the US economy.
The success of the embargo shows Saudi Arabia's diplomatic and economic power. It is the largest oil exporter and conservative kingdom in politics and religion.
Maps 1973 oil crisis
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Decrease in US oil production
In 1970, US oil production began to decline, exacerbating the impact of the embargo. Following this, Nixon appointed James E. Akins as US Ambassador to Saudi Arabia to audit US production capacity. The secret results are worrying - there is no available reserve capacity and production can only be reduced.
The oil embargo has little effect on overall supply, according to Akins.
OPEC
The Organization of the Petroleum Exporting Countries (OPEC), which later consisted of 12 countries, including Iran, seven Arab countries (Iraq, Kuwait, Libya, Qatar, Saudi Arabia and the United Arab Emirates), plus Venezuela, Indonesia, Nigeria and Ecuador, Baghdad on September 14, 1960. OPEC was held to counter pressure by the "Seven Sisters" (seven major Western oil companies) to lower oil prices.
Initially, OPEC operated as an informal bargaining unit for resource-rich third world countries. OPEC limits its activities to get a larger share of the profits generated by oil companies and greater control over the members' production levels. In the early 1970s began to exert economic and political power; oil companies and importing countries are suddenly facing a unified exporter bloc.
End of currency agreement Bretton Woods
On August 15, 1971, the United States unilaterally withdrew from the Bretton Woods Agreement. The US abandoned the Gold Exchange Standard where the dollar value has been pegged to the price of gold and all other currencies pegged to the dollar, whose value is allowed to "float" (up and down according to market demand). Soon the British followed, floating pound sterling. Other industrialized countries follow suit with their respective currencies. Anticipating that the value of the currency will fluctuate unexpectedly for a while, industrialized countries increase their reserves (by extending their money supply) in much larger quantities than before. The result is the depreciation of the dollar and the currencies of other industrialized nations. Because oil prices are in dollars, the real income of oil producers decreases. In September 1971, OPEC issued a joint communique stating that, from then on, they will fix the price of oil in fixed amounts of gold.
It contributes to "Oil Shock". After 1971, OPEC was slow to adjust prices to reflect this depreciation. From 1947 to 1967, the dollar price of oil has risen by less than two percent per year. Until the oil shock, prices also remain stable compared to currencies and other commodities. OPEC ministers have not yet developed an institutional mechanism to renew prices in line with changing market conditions, so their real income is lagging behind. The huge price increases in 1973-1974 largely restored their prices and revenues corresponding to Bretton Woods levels in terms of commodities such as gold.
Yom Kippur War
On October 6, 1973, Syria and Egypt, with support from other Arab countries, launched a surprise attack on Israel, on Yom Kippur. The renewal of hostility in the Arab-Israeli conflict has unleashed substantial economic pressure on oil prices. At the time, Iran was the world's second largest oil exporter and a close US ally. A few weeks later, the Shah of Iran said in an interview: "Of course [oil price] will go up... Of course! And how!... You have [the western countries] increase your wheat price to sell us by 300 percent, and the same for sugar and cement... you buy our crude oil and sell it back to us, refined as petrochemical, at a price a hundred times the price you paid... Just fair that, from now on, you have to pay more for oil, say ten times more. "
On October 12, 1973, US President Richard Nixon authorized the Operation of Nickel Grass, a strategic air transport to deliver arms and supplies to Israel, after the Soviet Union began delivering arms to Syria and Egypt.
Embargo
In response to US aid to Israel, on October 16, 1973, OPEC raised its installed oil price by 70%, to $ 5.11 per barrel. The next day, petroleum ministers agreed to the embargo, cut production by five percent from September production and to continue to cut production in a five percent monthly increase until their economic and political goals were met. On October 19, Nixon asked Congress to provide $ 2.2 billion in emergency aid to Israel, including $ 1.5 billion in direct grants. George Lenczowski noted, "Military supplies do not deplete Nixon's spirit to prevent the collapse of Israel... This [$ 2.2 billion] decision triggered a collective OPEC response." Libya soon announced an embargo on oil shipments to the United States. Saudi Arabia and other Arab oil-producing countries joined the embargo on October 20, 1973. At their Kuwait meeting, OAPEC proclaimed an embargo that curbed exports to various countries and blocked all oil shipments to the US as a "hostile main country".
Price increases are also very forced. Because short-term oil demand is not elastic, demand goes down a bit as prices rise. Thus, the market price rises from $ 3 per barrel to $ 12 per barrel to reduce demand to lower supply levels. The world's financial system, already under pressure from the fall of Bretton Woods, was on the backs of recession and inflation that persisted until the early 1980s, with oil prices remaining high until 1986.
In the long run, the oil embargo changes the nature of policies in the West towards increased exploration, alternative energy research, energy conservation and tighter monetary policy to fight inflation better.
Chronology
- January 1973 - The 1973-74 stock market crisis began as a result of inflationary pressures and a collapsed monetary system.
- August 23, 1973 - In preparation for the Yom Kippur War, Saudi King Faisal and Egyptian President Anwar Sadat met in Riyadh and secretly negotiated a treaty in which the Arabs would use "oil weapons" as part of a military conflict.
- October 6 - Egypt and Syria attacked land occupied by Israel in the Sinai Peninsula and Golan Heights in Yom Kippur, beginning the 1973 Arab-Israeli War.
- Evening 8 October - Israel continues full nuclear alert. Kissinger was notified on the morning of 9 October. The United States began supplying Israel.
- October 8-10 - OPEC negotiations with major oil companies to revise the 1971 Tehran price agreement failed.
- October 12 - The United States begins Operation Nickel Grass, strategic air freight to provide weapons and replacement supplies to Israel. It follows a similar Soviet move to supply the Arab side.
- Oct 16 - Saudi Arabia, Iran, Iraq, Abu Dhabi, Kuwait and Qatar raised the posted price by 17% to $ 3.65 a barrel and announced production cuts.
- October 17 - OAPEC oil minister agrees to use oil to influence Western support for Israel. They recommend embargoes against non-complying countries and mandated export deductions.
- October 19 - Nixon asks Congress to provide $ 2.2 billion in emergency aid to Israel, which sparked a collective Arab response. Libya soon proclaims an embargo on oil exports to the US. Saudi Arabia and other Arab oil producing countries followed the following day.
- October 26 - The Yom Kippur War is over.
- November 5 - Arab producers announced a 25% production cut. The next 5% cut is threatened.
- November 23 - Arab embargo extended to Portugal, Rhodesia and South Africa.
- November 27 - Nixon signs the Emergency Petroleum Allocation Act that authorizes price control, production, allocation and marketing.
- December 9 - Arab oil ministers agreed on another five per cent cut of production for non-friendly countries in January 1974.
- December 25 - Arab oil minister canceled output cuts in January. Saudi oil minister Ahmed Zaki Yamani pledged a 10 per cent increase in OPEC output.
- January 7-9, 1974 - OPEC decides to freeze prices until April 1.
- January 18 - Israel signs a withdrawal agreement to retreat to the eastern side of the Suez Canal.
- February 11 - Kissinger reveals the Project Independence plan for US energy independence.
- February 12-14 - Progress in Arab-Israeli exclusion led to a discussion of the oil strategy among the Algerian, Egyptian, Syrian, and Saudi Arab heads of state.
- March 5 - Israel withdraws its last army from the west side of the Suez Canal.
- March 17 - Arab oil minister, with the exception of Libya, announces the end of the US embargo.
- May 31 - Diplomacy by Kissinger yields a disagreement on the Syrian front.
- December 1974 - The 1973-74 stock market crashes over.
Effects
immediate economic effects
The impact of the embargo was imminent. OPEC forced the oil companies to increase payments drastically. Oil prices increased fourfold in 1974 to nearly US $ 12 per barrel (75 US $/m 3 ).
This price increase has a dramatic effect on oil-exporting countries, since countries in the Middle East that have long been dominated by industrial power are seen to have taken control of vital commodities. The oil-exporting countries began to accumulate enormous wealth.
A portion of the revenue is distributed in the form of aid to other underdeveloped countries whose economies have been caught between higher oil prices and lower prices for their own export commodities, amidst a shrinking demand for the West. Many buy weapons that exacerbate political tensions, especially in the Middle East. Saudi Arabia spent more than 100 billion dollars in the following decades to help spread its fundamentalist interpretation of Islam, known as Wahhabism, worldwide, through religious charities such as the Haramain Foundation, which often also distribute funds to extremist groups Cruel Sunnis like Al-Qaeda and the Taliban.
Oil control is known as the "oil weapon." It comes in the form of an embargo and reduction of production from Arab countries. The weapons were aimed at the United States, Britain, Canada, Japan and the Netherlands. These target governments feel that the intention is to push them toward a more pro-Arab position. Production finally cut 25%. However, the affected countries did not make dramatic policy changes.
In the United States, experts argue that there has been a negotiated settlement based on equality between the two sides before 1973. The possibility that the Middle East could be another super power confrontation with the Soviet Union is more of a concern for the US than oil. Furthermore, interest groups and government agencies more concerned about energy are not suitable for Kissinger's dominance. In US production, distribution and price disruption "have been responsible for the recession, excessive periods of inflation, reduced productivity, and lower economic growth."
Embargo has a negative effect on the US economy by causing immediate demands to address threats to US energy security. At the international level, price increases change competitive positions in many industries, such as cars. Macroeconomic issues consist of the effects of inflation and deflation. Embargo leaves oil companies looking for new ways to increase oil supplies, even in heavy terrains like the Arctic. Finding oil and developing new fields usually takes five to ten years before significant production.
OPEC member states increase the prospect of nationalizing oil company ownership. In particular, Saudi Arabia nationalized Aramco in 1980 under the leadership of Saudi oil minister Ahmed Zaki Yamani. As other OPEC countries followed suit, cartel revenues increased. Saudi Arabia undertook a series of ambitious five-year development plans. Largest began in 1980, funded $ 250 billion. Other cartel members also undertook a major economic development program.
The US retail price of gas prices rose from the national average of 38.5 cents in May 1973 to 55.1 cents in June 1974. The state government asked residents not to install Christmas lights. Oregon bans Christmas and commercial lighting altogether. Politicians are calling for a national gas allotment program. Nixon asks the petrol station to voluntarily not sell gas on Saturday night or Sunday; 90% of owners fulfilled, which resulted in long queues.
Embargo is not uniform across Europe. Of the nine members of the European Economic Community (EEC), the Netherlands faced a complete embargo, Britain and France received an almost uninterrupted supply (after refusing to allow Americans to use their airfields and embargoing arms and supplies to Arab and Israeli), while six others partial reduction. Britain has traditionally been an ally of Israel, and the government of Harold Wilson supported the Israelis during the Six Day War. His replacement, Ted Heath, reversed this policy in 1970, calling on Israel to withdraw to the pre-1967 border.
The EEC was unable to achieve a general policy during the first month of the War. It issued a statement on Nov. 6, after an embargo and a price increase had begun. It was widely seen as pro-Arab support Franco-English lines on the war. OPEC has revoked its citizens from all EEC members. The rise in prices has far greater impact in Europe than the embargo.
Although relatively unaffected by the embargo, Britain still faces its own oil crisis - a series of strikes by coal miners and rail workers during the winter of 1973-74 became a major factor in government change. Heath asked the UK to heat only one room in their home during the winter. Britain, Germany, Italy, Switzerland and Norway banned flying, driving and boating on Sunday. Sweden rations gasoline and heats oil. The Netherlands imprisoned those who used more than their electricity rations.
A few months later, the crisis subsided. The embargo was lifted in March 1974 after talks at the Washington Oil Summit, but the impact persisted throughout the 1970s. Energy dollar prices rose again the following year, amid a weakening of the dollar's competitive position in world markets.
Price control and allotment
United States
Price control exacerbates the crisis in the US. This system limits the price of "old oil" (which has been found) while allowing newly discovered oil to be sold at a higher price to encourage investment. Predictably, old oil is pulled from the market, creating a greater scarcity. The rule also hinders the development of alternative energy. The rule is intended to promote oil exploration. Scarcity is handled with rationing (as in many countries). Motorists faced long lines at gas stations beginning in summer 1972 and increased in the summer of 1973.
In 1973, Nixon appointed William E. Simon as the first Administrator of the Federal Energy Office, a short-term organization established to coordinate the response to the embargo. Simon allocated the same amount of domestic oil for 1974, each consumed in 1972, working for countries whose populations did not increase. In other states, the channels at the gas stations are common. The American Automobile Association reported that in the last week of February 1974, 20% of the American gas stations lacked fuel.
Odd-even rationing allowed the vehicle with an odd number plate as the last digit (or vanity plate) to buy gas only on odd days of the month, while others could buy on even the even day.
In some states, a three-color flag system is used to indicate the availability of gasoline at service stations - green for programmatic availability, yellow for limited sales/rations and red for stock runs out.
The allotment caused a violent incident, when the truck driver chose a two-day strike in December 1973 due to the limited supply that Simon had allocated to their industry. In Pennsylvania and Ohio, unobtrusive truck drivers were shot by stranded truckers, and in Arkansas, non-assailant trucks were attacked with bombs.
America has been controlling the price of natural gas since the 1950s. With the 1970s inflation, the price was too low to encourage the search for new reserves. American natural gas reserves shrank from 237 trillion in 1974 to 203 trillion in 1978. Price controls remain unchanged despite President Gerald Ford repeating his request to Congress.
Conservation and request reduction
United States
To help reduce consumption, in 1974 the national maximum speed limit of 55 mph (about 88 km/h) was enforced through the Emergency Road Energy Conservation Act. The Development of Strategic Petroleum Reserves began in 1975, and in 1977 the Cabinet-level Energy Department was created, followed by the 1978 National Energy Act. On 28 November 1995, Bill Clinton signed the National Highway Law Alliance, ending the federal Speed ​​Limit 55 mph (89 km/h), allows the state to restore the previous maximum speed limit.
Daytime saving time was implemented from 6 January 1974, to 27 October 1975, with a gap between 27 October 1974 and 23 February 1975, when the country observed the standard time. This move spawned significant criticism for forcing many children to go to school before sunrise. The previous rule was restored in 1976.
Crisis encourages calls to save energy, especially campaigns by the Ad Council using the tag "Do not Be Fuelish". Many newspapers have ads featuring cut-outs that can be attached to a light switch, reading "Last Out, Lights Out: Do not Be Fuelish."
In 1980, a domestic luxury car with a 130-inch (3.3 m) wheelbase and an average gross weight of 4,500 pounds (2,041 kg) was no longer made. Automakers have begun gradually removing the front engine layout/traditional rear wheel drive in a compact car that supports a lighter front engine/steering front. A higher percentage of cars offer a more efficient 4-cylinder engine. Domestic car makers are also beginning to offer diesel-powered passenger cars that are more fuel-efficient as well.
Although not regulated by the new law, voluntary car groups voluntarily began to preserve. In 1974, Daytona's 24 Hour was canceled and NASCAR reduced all race distance by 10%; 12 Hour Sebring race canceled.
In 1976, Congress created the Weather Assistance Program to help low-income homeowners and tenants reduce their demand for heating and cooling through better insulation.
Alternative energy sources
The energy crisis caused greater interest in renewable energy, nuclear power, and domestic fossil fuels. According to Peter Grossman, America's energy policy since the crisis was dominated by mental crisis thinking, promoting costly quick fixes and single-shot solutions that ignore market and technological realities. He wrote that instead of providing stable rules that support basic research while leaving much scope for entrepreneurship and innovation, congresses and presidents have repeatedly supported a policy that promises a politically wise solution, but its prospects are in doubt.
The Brazilian government implemented the "ProÃÆ'¡lcool" (pro-alcohol) project in 1975 that mixed ethanol with gasoline for automotive fuel.
Israel is one of the few countries that is not affected by the embargo, because it can extract enough oil from the Sinai. But to complement Israel's overloaded power network, Harry Zvi Tabor, the father of the Israeli solar industry, developed a prototype for solar water heating that is now used in more than 90% of Israeli homes.
Macroeconomics
The crisis is a major factor in shifting the Japanese economy from the intensive oil industry. Investments shifted to industries such as electronics. Japanese car makers also benefit from the crisis. Increased fuel costs allow their fuel-efficient small models to gain market share from a "dizzying gas" American competition. This triggered a decline in US auto sales that lasted until the 1980s.
The Western central bank decided to cut interest rates sharply to encourage growth, deciding that inflation is a secondary concern. Although this was an orthodox macroeconomic prescription at the time, the resulting stagflation shocked economists and central bankers. This policy is now considered by some to have deepened and prolonged the adverse effects of the embargo. Recent research claims that in the period after 1985 the economy became more resistant to rising energy prices.
Price shocks create large current account deficits in oil importing countries. The petrodollar recycling mechanism was created, through which the OPEC surplus funds were channeled through the capital market to the West to finance the current account deficit. The function of this mechanism requires the relaxation of capital controls in the oil importing economy. This marks the beginning of the exponential growth of Western capital markets.
Many in the community remain suspicious of oil companies, believing they are profiting, or even colluding with OPEC. In 1974, seven of the top fifteen Fortune 500 companies were oil companies, falling to four by 2014.
International relations
United States
The American Cold War policy suffered a major blow from the embargo. They focus on China and the Soviet Union, but the latent challenge to US hegemony coming from the third world becomes real.
In 2004, unclassified documents revealed that the US was so hit by rising oil prices and challenged by underdeveloped countries that they briefly considered military action to seize the Middle East oil field by the end of 1973. Although no explicit plan was mentioned, a conversation between US Defense Secretary James Schlesinger and British Ambassador to the United States Lord Cromer revealed Schlesinger had told him that "it is no longer clear to him that the US can not use force." The British Prime Minister Edward Heath was very worried about this prospect so he ordered British intelligence estimates of US intentions, which concluded America "might find it incapable of tolerating a situation where the US and its allies are under the mercy of a small group of nonsensical states," and that they would prefer quick operations to seize oil fields in Saudi Arabia and Kuwait, and possibly Abu Dhabi if military action is decided. Although the Soviet response to such an action is unlikely to involve force, intelligence warns "the American occupation will be necessary for the last 10 years because the West is developing alternative sources of energy, and will produce 'total alienation' from Arabs and many from the rest of the Third World.
NATO
Western Europe began to move from pro-Israel to a more pro-Arab policy. This change depresses the Western alliance. The United States, which imports only 12% of its oil from the Middle East (compared to 80% for Europe and over 90% for Japan), remains firmly committed to Israel. The percentage of US oil originating from countries bordering the Persian Gulf remained stable for decades, with rates slightly more than 10% in 2008.
With the embargo in place, many developed countries are changing their policies on the Arab-Israeli conflict. These include Britain, who refuse to allow the United States to use British and Cypriot bases to send back to Israel along with other members of the European Community.
Canada shifted toward a more pro-Arab position after the displeasure was expressed against Canada's largely neutral position. "On the other hand, after the Canadian government's embargo moves quickly toward the Arab position, despite its low dependence on Middle East oil".
Japanese
Although it has no historical connection to the Middle East, Japan is the country most dependent on Arab oil. 71% of its imported oil came from the Middle East in 1970. On 7 November 1973, the Saudi and Kuwaiti governments declared Japan a "hostile" state to encourage it to change its non-engagement policy. It received a 5% production cut in December, causing panic. On November 22, Japan issued a statement "asserting that Israel must withdraw from all 1967 territories, advocate for Palestinian self-determination, and threaten to reconsider its policy toward Israel if Israel refuses to accept these preconditions". On December 25, Japan is considered a friendly country towards Arabs.
Country not listed
The oil embargo was announced about a month after Chile's right-wing military coup led by General Augusto Pinochet overthrew the socialist president of Salvador Allende on September 11, 1973. The Nixon government's response was to propose a doubling of arms sales. As a result, an opposite Latin American block was organized and partially funded by Venezuela's oil revenues, which quadrupled between 1970 and 1975.
A year after the start of the embargo, the UN non-aligned bloc passed a resolution demanding the creation of a "New International Economic Order" in which Southern countries would receive a greater share of benefits derived from the exploitation of southern and larger resources. control over their self-development.
Arabic countries
Prior to the embargo, the geo-political rivalry between the Soviet Union and the United States, in combination with low oil prices that inhibited the need and feasibility of alternative energy sources, presented Arab States with financial security, moderate economic growth, and disproportionate. international bargaining power.
Oil shocks disrupt the status quo relationship between Arab countries and the US and the Soviet Union. At that time, Egypt, Syria and Iraq allied with the Soviet Union, while Saudi Arabia, Turkey and Iran (plus Israel) were in harmony with the US. Lined parallels often result in greater support from their respective superpowers.
When Anwar Sadat became Egyptian president in 1970, he fired Soviet specialists in Egypt and reoriented against the United States. Concerns over the economic dominance of an increase in Soviet oil production turned into fears of military aggression after the 1979 Soviet invasion of Afghanistan, turning the Persian Gulf countries toward the United States for security guarantees against Soviet military action.
The invasion of the Soviet Union into Afghanistan is only one sign of insecurity in the region, which is also marked by an increase in arms sales, technology, and the presence of the American military. Saudi Arabia and Iran are becoming increasingly dependent on American security guarantees to manage external and internal threats, including increased military competition among them on increasing oil revenues. Both countries competed for excellence in the Persian Gulf and used increased revenues to finance an expanded military. In 1979, Saudi weapons purchases from the US exceeded fivefold Israel.
After the 1979 Iranian Revolution, the Saudis were forced to confront the prospect of internal destabilization through the radicalism of Islamism, a reality that would soon be revealed in the attack on the Grand Mosque in Makkah by Wahhabi extremists during November 1979, and a Shiite Muslim Uprising in the oil-rich Al-Hasa Arab region in December of the same year, known as the 1979 Qatif Rebellion. Saudi Arabia is a near absolute monarchy, an Arabic speaking country, and has a majority of Sunni Muslims, while Persian speaking Iran since 1979 is a Muslim theocracy with a majority of Shia Muslims, Saudi Arabia and Iran today.
In November 2010, Wikileaks leaked a secret diplomatic cable linked to the United States and its allies which revealed that the late Saudi King Abdullah urged the United States to attack Iran to destroy the potential of its nuclear weapons program, describing Iran as "a snake whose head should be cut off without delay ".
Car industry
The oil crisis sent a signal to the global automotive industry, which changed many aspects of production and usage over the next few decades.
Western Europe
After World War II, most Western European countries imposed taxes to restrict imports, and as a result most of the cars made in Europe were smaller and more economical than their American counterparts. In the late 1960s, income increases supported the increase in car size.
The oil crisis pushed Western European car buyers away from bigger and less economical cars. The most prominent result of this transition is the increasing popularity of the compact hatchback. The only famous small hatchback built in Western Europe before the oil crisis was Peugeot 104, Renault 5, and Fiat 127. By the end of the decade, the market had grown with the introduction of Ford Fiesta, Opel Kadett (sold as Vauxhall Astra in the United Kingdom, Chrysler Sunbeam and CitroÃÆ'§n Visa.
Buyers looking for larger cars are increasingly interested in medium-sized hatchbacks. Almost unknown in Europe in 1973, by the end of the decade they gradually replaced saloons as the mainstay of this sector. Between 1973 and 1980, medium-sized hatchbacks were launched across Europe: Chrysler/Simca Horizon, Fiat Ritmo (Strada in the UK), Ford Escort MK3, Renault 14, Volvo 340/360, Opel Kadett, and Volkswagen Golf.
These cars are much more efficient than the traditional sedans they replace, and attract buyers who traditionally buy larger vehicles. About 15 years after the oil crisis, hatchbacks dominated most of Europe's small and medium-sized car markets, and have gained a large share of the big-family car market.
United States
Before the energy crisis, big, heavy, and powerful cars were very popular. In 1971, the standard engine in the Chevrolet Caprice was a 400-cubic inch (6.5 liter) V8. The wheelbase of this car is 121.5 inches (3,090 mm), and 1972 road tests in 1972 from the Chevrolet Impala reached no more than 15 miles of highway per gallon. In the fifteen years before the 1973 oil crisis, gasoline prices in the US lagged far behind inflation.
The crisis reduced demand for large cars. Imported Japan, especially Toyota Corona, Toyota Corolla, Datsun B210, Datsun, 510, Honda Civic, Mitsubishi Galant (import prisoners from Chrysler sold as Dodge Colt), Subaru DL, and then Honda Accord all have four more fuel-efficient cylinder engines compared to the typical American V8 and six-cylinder engine. Japanese imports become mass market leaders with unibody construction and front wheel drive, which became the de facto standard.
From Europe, Volkswagen Beetle, Volkswagen Fastback, Renault 8, Renault LeCar, and Fiat Brava success. Detroit responded with Ford Pinto, Ford Maverick, Chevrolet Vega, Chevrolet Nova, Plymouth Valiant and Plymouth VolarÃÆ'Â ©. American Motors sells its GREMLIN, Hornet, and Pacer models.
Some buyers regretted the small size of the first Japanese compacts, and Toyota and Nissan (later known as Datsun) introduced larger cars such as the Toyota Corona Mark II, the Toyota Cressida, the Mazda 616 and the Datsun 810, which added passenger space and facilities such as air conditioning, power steering, AM-FM radio, and even power windows and central locking without increasing vehicle prices. A decade after the 1973 oil crisis, Honda, Toyota and Nissan, affected by voluntary export restrictions in 1981, opened US assembly plants and established their luxury divisions (Acura, Lexus and Infiniti, respectively) to differentiate themselves from their mass market brands.
Compact trucks were introduced, such as Toyota Hilux and Datsun Truck, followed by Mazda Truck (sold as Ford Courier), and Isuzu-built Chevrolet LUV. Mitsubishi recruited its Forte as a Dodge D-50 several years after the oil crisis. Mazda, Mitsubishi and Isuzu have joint partnerships with Ford, Chrysler, and GM, respectively. Then American makers introduced their domestic substitutes (Ford Ranger, Dodge Dakota and Chevrolet S10/GMC S-15), ending their captive import policy.
The increase in imported cars to North America forced General Motors, Ford and Chrysler to introduce smaller and more fuel-efficient models for domestic sales. Dodge Omni/Plymouth Horizon from Chrysler, Ford Fiesta and Chevrolet Chevette all have four-cylinder engines and space for at least four passengers in the late 1970s. In 1985, the average American vehicle moved 17.4 miles per gallon, compared to 13.5 in 1970. Improvements remain despite the price of one barrel of oil remained constant at $ 12 from 1974 to 1979. Large sedan sales for most brands (except Chrysler Products) recovered within two years of the 1973 crisis model. Cadillac DeVille and Fleetwood, Buick Electra, Oldsmobile 98, Lincoln Continental, Mercury Marquis and other luxury sedans became popular again in the mid-1970s. The only full-size models that do not recover are lower-priced models such as the Chevrolet Bel Air and the Ford Galaxie 500. Moderately smaller models like the Oldsmobile Cutlass, the Chevrolet Monte Carlo, the Ford Thunderbird, and many others are selling well.
Economical imports succeed in addition to heavy and expensive vehicles. In 1976 Toyota sold 346,920 cars (an average weight of about 2,100 pounds), while Cadillac sold 309,139 cars (an average weight of about 5,000 pounds).
Federal safety standards, such as NHTSA Federal Motor Vehicle Safety Standard 215 (relating to safety bumpers), and compacts such as my 1974 Mustang are a prelude to the DOT "downsize" revision of vehicle categories. In 1977, GM's full-size car mirrored the crisis. By 1979, almost all "full-sized" American cars had shrunk, featuring smaller engines and smaller outer dimensions. Chrysler ended the production of their full-sized luxury sedan at the end of the 1981 model year, moving instead onto the full front-wheel drive lineup for 1982 (except for M-body Dodge Diplomats/Plymouth Gran Fury and Chrysler New Yorker Fifth Avenue sedans).
Decrease in OPEC
OPEC soon lost its leading position, and in 1981, its production was surpassed by other countries. In addition, the member countries are divided. Saudi Arabia, trying to recover market share, increase production, push down prices, reduce or eliminate profits for high-cost producers. World prices, which had peaked during the 1979 energy crisis at nearly $ 40 a barrel, declined during the 1980s to less than $ 10 a barrel. Adjusted with inflation, oil briefly dropped back to pre-1973 levels. This "selling" price is a windfall for oil importing countries, both developed and advanced.
Embargoes are driving new venues for energy exploration including Alaska, the North Sea, Caspian Sea, and the Caucasus. Exploration in the Caspian and Siberian Basins became profitable. Cooperation turned into a much more hostile relationship because the Soviet Union increased its production. In 1980, the Soviet Union had become the world's largest producer.
Part of the decline in prices and the economic and geopolitical power of OPEC comes from moving to alternative energy sources. OPEC has relied on price ineliness to sustain high consumption, but has underestimated the extent to which conservation and other supply sources will eventually reduce demand. Power plants from nuclear power and natural gas, home heating from natural gas, and ethanol alloy gasoline all reduce the demand for oil.
The fall in prices poses a serious problem for oil-exporting countries in northern Europe and the Persian Gulf. Densely populated poor countries, whose economies are heavily dependent on oil - including Mexico, Nigeria, Algeria, and Libya - are not preparing market reversals that make them sometimes in desperate situations.
Source of the article : Wikipedia
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