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Lately, we've been doing a lot of research on the early to mid-seventies luxury cars for the Automotive Mileposts site. One of the continuing themes that we keep coming across was the oil embargo and resultant gas crisis of 1973-1974. That event had a huge impact on the cars we bought and drove in the seventies, as well as the cars that were built and designed in the years following. Due to the long lasting effects this relatively short-lived event had, we thought some details might be of interest to our readers. And while we were researching this story, we also learned a few things we didn't know.
As cars became larger and heavier during the fifties and sixties, no one really gave much thought to fuel economy. Thrifty people have always been around, of course, and that's not to say that there weren't people who considered how far a car could go between fill ups. In fact, demand for smaller, efficient cars in relatively recent history dates back to 1960, when the Ford Falcon and Valiant compacts hit the market. (The first year Valiant wasn't identified as a Plymouth, but as its own distinct brand. Later, it was given to Plymouth.) Both were immediate successes, which led to a lot of growth in this market.
During this time, the United States was mostly self-sufficient when it came to energy sources. But as more and more people purchased cars, and as single car families became two car families, demand for gasoline increased. By the early seventies, the United States was relying on imported oil for 35 percent of its needs. And that dependency would continue to grow.
On October 6, 1973, Egyptian and Syrian armed forces attacked Israel. It just so happened that this date was the Jewish holy day of Yom Kippur. The United States decided to assist the Israeli military with supplies, which angered the members of the Organization of Arab Petroleum Exporting Countries (OAPEC), which consisted of the Arab members of the Organization of the Petroleum Exporting Countries (OPEC) as well as Egypt, Syria, and Tunisia. On October 17, OAPEC proclaimed an oil embargo be instituted on shipments of oil to the United States in retaliation. Two days later, Saudi Arabia, Libya, and other Arab states followed through with the proclamation, and imposed the embargo.
Before long, the price of crude oil increased from $3 to more than $5 a barrel (42 US gallons). At the start of the new year in 1974, the cost of a barrel of oil had shot up to almost $12! This meant that the cost of a gallon of gasoline in America, which was around 30 cents a gallon in the summer of 1973 had increased to around 60 cents a gallon! In comparison to today's cost for a gallon of gasoline, that 60 cents seems like a bargain, but in 1974 dollars, it was a huge shock to the public.
At the time of the gas crisis, almost 85 percent of all Americans drove a car to work by themselves. As public concern began to grow, fueled by nightly news reports of long lines at gas stations, accompanied by scenes of hastily scribed "NO GAS" and "OUT OF GAS" signs attached to gas pumps and placed in front of gas stations, the Nixon Administration moved quickly to manage the crisis. Price controls on domestic oil were put in place, and sales of gasoline were banned on Sunday. Motorists could only fill up on odd or even days of the month, according to their license plate numbers.
At the same time, the public began looking for more fuel efficient cars, and at the time there were only a few American-made cars that fit that description. Ford had the Pinto, Chevrolet the Vega, and AMC had the Gremlin. Imported cars began attracting attention as well, and the American auto manufacturers knew they would have to work quickly to be able to supply this new demand.
In March of 1974, the embargo ended, brought about by the promise of a negotiated settlement between Israel and Syria. Gasoline was soon flowing freely again, and many Americans gravitated back to the big, full-sized cars they'd grown accustomed to. But this would not be the last crisis of this kind. In 1979, a second oil crisis happened after the Iranian Revolution. Because of the conflict in Iran, oil exports were disrupted for a time, then finally suspended, which contributed to a shortage.
The regulation of oil prices remained in effect until April 5, 1979, when the Carter Administration began a phased in deregulation. At the time, the average cost of a barrel of crude oil was $15.85. During the next year, the price rose to $39.50 a barrel, which was its all time highest real price (adjusted for inflation) until March 7, 2008.
Deregulation caused U.S. oil output to increase sharply, and at the same time imports dropped off just as fast. Once again, long lines appeared at gas stations just as they had earlier in the decade. At the time, it was estimated that the average vehicle consumed 0.5 to 0.8 gallons of gas per hour while idling. That came out to the equivalent of 150,000 barrels of oil a day wasted while people idled their engines waiting in line to buy gas!
The blame for high gas prices was placed on the oil companies by many Americans, as they believed prices were increased by artificially creating shortages when there really were none. After a record year for oil consumption in 1978, even with higher prices, consumption only dropped 3.5 percent in 1979.
By 1980, production had caught up and demand was reduced enough that oil prices began a six year decline that ended in 1986 with a 46 percent price drop. Over-production by OPEC countries created problems within the group. As prices dropped, demand began to increase again and dependency on foreign oil in the U.S. continued to grow. Today, approximately 57 percent of the oil we use in this country is imported. Drivers of classic vehicles can do their part to reduce their petroleum use by driving their cars sensibly, keeping them tuned properly, and planning ahead for those times when you'll be using the car, to combine multiple trips into one, and driving when traffic congestion is likely to be light.
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