Oil crisis or Energy evolution? Oil crisis of 1973-1974.

And their allies in Western Europe. Over the next year, the price of oil rose from three to twelve dollars per barrel. In March 1974, the embargo was lifted.

The 1973 oil crisis was the first energy crisis and is still considered the largest. OPEC reduced oil production not only to influence world prices in its favor. The main objective of this action was to create political pressure on the world community in order to reduce Western support for Israel.

The result of OPEC's economic pressure was a declaration by the Council of Ministers of the Common Market countries, which supported the position of the Arabs. In addition, almost all African states have severed diplomatic relations with Israel. The created political situation increased Israel's dependence on the United States and revealed the true extent of developed countries' dependence on oil prices.

At the same time, the crisis contributed to increased oil exports to the West from the Soviet Union.

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Oil crisis in the USA

USSR

As a result of the oil crisis and the subsequent 4-fold increase in oil prices, oil supplies from the USSR increased sharply. Also, large supplies of Soviet oil to the world market begin through the CMEA member countries, primarily Poland.

see also

Literature

• Daniel Yergin. Extraction: A World History of the Struggle for Oil, Money and Power = The Prize: The Epic Quest for Oil, Money, and Power. - M.: "Alpina Publisher", 2011. - 960 p. - ISBN 978-5-9614-1252-9.
• Ammann, Daniel. The King of Oil: The Secret Lives of Marc Rich. - New York: St. Martin's Press, 2009. -

Israeli troops on the Golan Heights in October 1973

OAPEC and oil prices

It just so happens that the Israeli state is located exactly in that part of the Middle East where there is little oil. Israel's Arab neighbors, on the contrary, are actively extracting and extracting oil. It is no coincidence that the first session of the Organization of the Petroleum Exporting Countries (OPEC) opened in 1960 in Baghdad, the capital of Iraq.

Arab OPEC - OAPEC, was formed independently of the main organization after the signing of an agreement between Kuwait, Saudi Arabia and Libya in Beirut (Lebanon). This happened in 1968, and by 1973 OAPEC already included Algeria, Bahrain, Egypt, Iraq, Qatar, Syria and the UAE.

The oil crisis in the West, manifested in a sharp increase in the purchase price of oil, occurred after two actions. First, OAPEC members decided at a general meeting that from October 17, 1973, they would not supply oil to Israel's allies in the Yom Kippur War. This applied to the USA, Canada, Japan and all of Western Europe. The second trigger is OPEC's decision that in October oil production will decrease by 5% from September, and this will happen every month. Such conditions have baffled the West.

What to do?

After such a maneuver, the price of oil went up sharply. Judge for yourself - in September 1973 a barrel cost $4.31, in January 1974 it was already $10. President Nixon, after the Department of Energy report, knew that the American oil industry could not cover the existing deficit, and then he decided to act around it.

In his special message to Congress, he calls on Americans to save money. In particular, Nixon invites neighbors to take turns giving each other a lift so that less fuel is wasted, and he advises driving at low speeds. Government agencies are told to save money and not spend money on cars, and airlines are asked to cut the number of flights.

Mass destruction and closure of gas stations across the country began, and monopolistic oil producers began to raise prices.

The American auto industry suffered the most. In the 50s and 60s, there was a fashion for muscle cars - luxury American-made cars with a large engine capacity. These were mainly Fords, Pontiacs, Dodges, Chevrolets and General Motors products. There is no clear definition of a muscle car, but car enthusiasts generally agree that it is “a mid-size car aimed at achieving maximum speed performance, equipped with a large V8 engine, and sold at an affordable price.” Judging by their popularity, the price was indeed affordable. But the car needs gasoline, and there are a lot of such cars. Automotive manufacturers suddenly began to lose profits and were forced to rebuild product lines. So, the average muscle car drove about 14 miles per gallon of fuel, and new models like the Ford Pinto or Chevrolet Vega drove already 17. At the same time, Japan is breaking into the US car market - Toyotas, Nissans and Hondas are much more economical and have four cylinders under the hood instead of eight.

Consequences

The oil crisis has become a precedent for world politics. The Arab world has proven that it can put pressure on the world's most powerful economies through control of resources. Since the 15th century, Europeans have imposed their will on other peoples of the world through force. The oil embargo became an instrument of “retribution” from the East against the West, and the will of oil exporters had to be taken into account.

To prevent this from happening in the future, most Western countries have created their own oil storage facilities, in case of new demarches from OPEC.

The recession and crisis caused by the oil embargo changed the further course of the world economy. The leading countries of the Western world could not afford to remain dependent on energy resources, so a reorientation to more high-tech industries began. Alternative energy, computer development and science-intensive fields began to develop, which determined the appearance of modern developed countries. Old industries were forced to either rebuild or disappear.

This is another uniqueness of the 1973 oil crisis - for many victims it became food for thought and a wake-up call that sounded decades earlier than expected. At the same time, the increase in prices worked in the opposite direction for our country: pipelines were stretched from rich deposits explored in Siberia to Europe, and foreign currency payments began to arrive in the Soviet Union. As a result, the country found itself on the so-called “oil needle” and the fall in energy prices in the late 70s and early 80s did not work in favor of the USSR.

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The OPEC oil embargo is a decision to stop exporting oil to the United States. Twelve members agreed to embargo October 19, 1973. Over the next 6 months, oil prices quadrupled. Prices remained at higher levels even after the embargo was in place canceled March 1974.

A review of the history of oil prices shows that they have never been the same since. Since the embargo, OPEC has continued to use its influence to control oil prices.Today OPEC controls 42% of supply oil in the world. The organization also controls 61% oil exports and has about 80 % proven reserves oil.

Causes of the oil crisis

In 1971, President Nixon decided to abolish it in the United States. As a result, countries could no longer exchange the dollars in their foreign exchange reserves for gold. This action by President Nixon went against the Bretton Woods Agreement of 1944. The US decision served as a catalyst for a sharp rise in gold prices. The history of the gold standard system shows that this step was inevitable. But Nixon's action was so sudden and unexpected that it also reduced the value of the dollar itself.

The sharp weakening of the dollar affected OPEC countries. Their oil contracts were denominated in US dollars. This meant that their income declined along with the weakening dollar. The value of imports expressed in other currencies remained unchanged or even increased. OPEC even intended to price oil in gold, rather than in dollars, in order to somehow offset the reduction in income.

Read more about OPEC in the article

The patience of OPEC leaders ran out when The United States supported Israel against Egypt in the Yom Kippur War. On October 19, 1973, Nixon demanded that Congress allocate$ 2.2 billion for emergency military assistance to Israel. Arab OPEC members responded by cutting off oil exports to the United States and Israel's other allies.

Egypt, Syria and Israel declared a truce on October 25, 1973. But OPEC continued the embargo until March 1974. By that time, oil prices had risen sharply from$ 2.9 per barrel to $11.65 per barrel.

Consequences of the oil crisis

The oil embargo is widely considered to be the cause of the 1973-1975 recession. But US government policies did cause the recession and the accompanying stagflation. Government policies included Nixon's wage controls and monetary policy. Payroll control meant maintaining high wages for employees, which meant that enterprises fired their employees to reduce costs. At the same time, corporations could not reduce prices to stimulate demand. Demand fell further when people lost their jobs.

Worse yet, The Fed has raised and lowered interest rates so many times. that businesses found it difficult to plan future budgets. As a result, companies kept prices high, which triggered inflation. They were afraid to hire new workers, thereby worsening the recession. However, Fed economists recognized the potential consequences from US history. Since then, the regulator has been consistent in pursuing monetary policy. More importantly, Fed chairs began to clearly signal their intentions long before the actual implementation of measures.

The oil embargo worsened inflation by 10% for some goods, due to higher oil prices.This comes at a vulnerable time for the US economy. Domestic oil producers were operating at full capacity. They were not able to produce more hydrocarbons to fully compensate for the drop in imports. Additionally, the share of U.S. oil production in global production fell as a percentage.

It also worsened the recession and reduced consumer confidence. People were forced to change their consumer needs due to the current crisis, which the government unsuccessfully tried to solve. This mistrust caused people to spend less.

For example, due to gasoline shortages, drivers were forced to stand in long lines that often extended for several blocks. People often woke up before dawn to avoid long lines. Gas stations were marked with colored signs: green when fuel was available, yellow– was available in sufficient quantity, and red– the gasoline has run out. Some states in the country introduced odd-even rationing: drivers with license plates ending in odd numbers could get gas on odd numbers.

Speed ​​limit has been reduced to save fuel up to 55 mph. Daylight saving time was established in 1974.Additionally, higher gasoline prices meant consumers had less money to spend on other goods and services, which further reduced consumption, worsening the recession.

The oil embargo gave OPEC new strength to achieve its goal of managing the world's oil supply and maintaining stable prices. By increasing and decreasing supply, OPEC tries to maintain the price from $ 70 to $80 per barrel. If the price falls below, OPEC profits are shrinking. Higher$80 – the development of shale deposits becomes attractive.

The United States created Strategic Petroleum Reserve(Strategic Petroleum Reserve), which must contain a volume corresponding to 90 days of oil consumption, in case of another embargo. Maximum storage size is approximately 727 million. barrels.

In the fall of 1857, the stock market collapsed in the United States. The reason was speculation in railroad stocks and the subsequent collapse of the American banking system. In the same year, a crisis engulfed England, whose banks had invested in shares of American companies. A little later, financial problems reach Germany.

Since 1849, the US economy has grown rapidly. Banks are actively lending to businesses. But as a result of falling grain prices, farmers who took out loans found themselves unable to pay their debts. And the beginning of general panic was a banal theft. The treasurer of a large Ohio bank stole a huge amount of cash. After this, the bank declared itself bankrupt. In less than a month and a half, more than 200 banks closed. Lending has practically stopped. You can only borrow money at 100 percent per annum.

On October 13, 1857, people rushed to withdraw their deposits, exchange banknotes for gold coins and cash bills. If in the morning the New York banks were still fulfilling their obligations and issuing money, then by the end of the day almost all of them were bankrupt. This is followed by a collapse in stock prices on the New York Stock Exchange. Following America, several large banks in England went bankrupt, and companies in the real sector began to have problems. The textile and engineering industries were particularly affected. By December 1857, Germany was also hit by the crisis.

Long-term problems were avoided. By the end of 1858, the American economy began to recover. Bankrupt companies and banks were replaced by new enterprises. The Bank of England first tried to solve the problem by doubling the refinancing rate, but when this did not help, it resorted to issuing unsecured banknotes. The measure turned out to be quite effective. By the fall of 1858, the economy was growing. And Germany was helped to solve problems with non-payments by Austria, which provided a loan in silver. An entire train was allocated to deliver it.

1873-1896. Long depression

In May 1873, the collapse of the Vienna stock exchange began one of the most protracted financial crises in history. The reason is the rapid growth of real estate markets in Austria-Hungary and Germany. Developers were given huge loans, which many of them were unable to repay. The panic that began on the stock exchanges of Europe spreads to the United States and then to Russia.

At the end of the 19th century, the governments of Austria-Hungary, France and Germany relied on capital construction. Banks were created to provide loans to developers. The first mortgage papers appeared. The debt burden of construction companies grew rapidly, and with it real estate prices. On Black Friday, May 9, 1873, the Vienna stock exchange crashed. Markets in Amsterdam and Zurich followed suit. After panic began on the stock exchanges in Europe, and German banks refused to extend debt to American companies, the crisis spread to the United States.

Already in September 1873, a large American railroad developer, the investment company Jay Cooke & Co., was unable to pay off its debts. Due to the horrendous drop in prices, the New York Stock Exchange closed for several days. Mass bank failures began. Small and medium-sized enterprises have stopped issuing loans. Unemployment reached 25-30 percent. Due to widespread layoffs in Pennsylvania mines, workers staged pogroms. The panic began.

It is believed that J.P. Morgan, one of the most influential bankers in America, played a significant role in ending the financial crisis, who provided $62 million in gold to the US Treasury Department. This made it possible to pay off sovereign obligations. Paradoxically, corporations were created during the Depression that still exist today. For example, in 1876, Thomas Edison opened his laboratory. A few years later, he created the Edison General Electric Company, which in 1896 was the first in history to enter the Dow Jones Industrial Average.

1929-1939. The Great Depression

There is no consensus on the causes of the Great Depression. Among the most probable is the disproportion between the mass of goods and the volume of funds; stock exchange “bubble” (investment in production beyond what is necessary); an increase in customs duties on imports and, as a consequence, a decline in the purchasing power of the population. In addition to the United States, Canada, Great Britain, Germany and France were particularly hard hit by the crisis.

One in six by 1933 was unemployed. The number of homeless people has increased sharply. Bethleem Steel fired 6,000 workers, evicted them from corporate-owned homes and demolished them to avoid paying property taxes. New York City Mayor Jimmy Walker urged movie theater owners to "show pictures that will lift the spirit of Americans and restore hope in them."

During the years of the crisis, about 40 percent of banks went bankrupt, their depositors lost $2 billion in deposits. After the Great Depression began, ordinary citizens hated bankers. From 1931 to 1935, the famous Bonnie and Clyde, who robbed banks and terrified bank employees, aroused sincere admiration among ordinary Americans.

By the beginning of the depression, automobile production had reached 5 million cars per year. By 1932, it had dropped to 1.3 million vehicles, that is, by 75 percent compared to 1929. General Motors founder William Durant lost more than $40 million, almost all of his money. GM barely survived the depression by pursuing harsh price-cutting policies.

1973-1975. Oil crisis

The largest energy crisis in history erupted in October 1973, when Syria and Egypt went to war with Israel. OPEC countries reduced oil production volumes and increased selling prices by 70 percent: first to the United States and the Netherlands, then to Israel's allies.

The number of unemployed people in the United States has reached 15 million. At the height of the crisis, university lecturer John Sperling drew attention to the large number of older students wanting to change their profession. This is how the idea of ​​developing a retraining program arose. Sperling founded the first for-profit educational institution, the University of Phoenix, and the Apollo Group. Now there are about 90 institutions across America with a capitalization of about $10.6 billion.

At the peak of the crisis, the price of a gallon of gasoline in the United States rose from 30 cents to $1.2. In America, 85 percent of Americans used personal cars. The lines at gas stations stretched for kilometers. For some time, a rule was in effect: owners of cars with odd number plates were given the right to refuel only on odd days, and vice versa. The governments of Austria and Germany have introduced a ban on the use of cars on certain days of the week.

In the United States, authorities have taken exceptional measures to support ordinary citizens. The Bankruptcy Commission, formed in the United States in 1973, recommended changes to laws that would allow a person who declares personal bankruptcy to retain part of the property, making it legally unavailable to creditors. Thus, in Texas, a bankrupt had the right to keep his house, regardless of its value, and property worth up to 30 thousand dollars.

1987-1989. "Black Monday"

On October 19, 1987, the Dow Jones Industrial Average crashed. Following the American stock market, in a wave of panic that caused an outflow of investors and a decrease in the capitalization of several largest transnational companies, stock exchanges in Australia, New Zealand, Canada, Hong Kong, South Korea and many Latin American countries collapsed.

Since August 1982, the Dow Jones index has shown steady growth. By August 1987, the Dow Jones doubled to 2,700. Meanwhile, in the economy, rapid recovery growth after the recession of the 70s was replaced by stable development. In early October, the Dow Jones gradually began to decline, and on Friday, October 16, the index lost 5 percent. The only person who predicted the collapse that occurred three days later was Arch Crawford, the owner of a company providing astrological business consultations.

On October 19, 1987, the Dow Jones stock index fell 22.6 percent. This crash was even worse than the stock market crash of October 28, 1929, which started the Great Depression. One possible explanation for the crash is the computer trading programs that traders used. They took into account the dynamics of the market and issued orders to buy if the market promised growth, and to sell if it was falling. And as soon as there was a turning point in the market dynamics after five years of growth, the programs issued a massive order to dump shares.

Contrary to the fears of economists and monetary authorities, there was no recession either in the US economy or in other countries whose stock exchanges felt the crash of 1987. The very next day, the Dow Jones index rose 12 percent. True, then there were again ups and downs, but not as significant as on Black Monday. The crisis affected to a greater extent those people who worked in the financial sector. In America, about 15 thousand brokers, traders, etc. lost their jobs. The Dow Jones reached its previous heights only in 1989.

1998-1999. Russian default

On August 17, 1998, the Government of the Russian Federation declares a default on government short-term bonds. The reasons for the crisis are an acute shortage of funds and Russia's huge public debt. The ruble against the dollar fell almost fourfold in six months, the confidence of the population and investors was undermined, and there were massive bankruptcies of small businesses and banks.

In May 1995, inflation in Russia was about 200 percent. To keep prices from rising, the government decides to finance the budget deficit by issuing government short-term debt. By May 1998, annual inflation had fallen to 7.5 percent. The GKO market operates according to a pattern: banks borrow money abroad, buy GKOs, and after a few months sell them and pay off their debts. The profitability of such operations is from 50 to 140 percent per annum. The Russian authorities are constantly issuing new loans to pay off previously issued ones. A financial pyramid is being created.

By the spring of 1998, monthly federal budget revenues amounted to 22 billion rubles, expenses - 25 billion rubles, and another 30 billion rubles to pay off domestic debt. On August 14, Russian President Boris Yeltsin announced on television that there would be no default. August 17 - default. The dollar exchange rate for the week from August 18 to 22 grows by only 60 kopecks. This is followed by the resignation of the government. On August 25, the ruble immediately falls by 10 percent. Already in September 1998, inflation was 400 percent (in December - 256 percent), the ruble exchange rate had collapsed almost four times by November 1998.

Despite the fact that monthly inflation figures are huge and the Central Bank is conducting an unsecured ruble issue, the refinancing rate remains at 12.5 per annum. This provides the real sector with affordable loans. At the end of 1999, as a result of import substitution, industry grew by 20 percent. World markets are recovering. During 1999, the price of oil doubles and reaches $27 per barrel. The outflow of money from banks stopped in March 1999. From mid-1999 to the end of the third quarter of 2000, banks' capital increased 2.5 times.

1997-2001. Asian crisis

In July 1997, the Asian financial crisis broke out. The reason is the rapid collapse of national currencies and stock indices of the countries of Southeast Asia, provoked by economic overheating, as well as unsustainable government and corporate debts. Indonesia, South Korea and Thailand were hit hardest by the crisis.

Before the crisis, Thailand, Indonesia, the Philippines, Malaysia and Singapore collected more than half of global investment. But in the mid-90s in the United States, in order to contain inflation, the monetary authorities increased the refinancing rate. The countries of Southeast Asia, in turn, are also raising their own rates - Asian currencies are strengthening, the competitiveness of products on the world market is falling due to rising costs. At the same time, corporate and government debt in Asian countries continues to rapidly increase.

On May 14, 1997, currency speculators - from George Soros' Quantum Fund to Julian Robertson's Tiger Management Corp - attacked the Thai baht. On July 2, the baht collapsed. During the month, the exchange rates of the Indonesian rupiah, Philippine peso and Malaysian ringgit fell. In Indonesia, the crisis led to mass uprisings and regime change. South Korea was also seriously affected. In early December, the government assured that short-term liabilities of corporations did not exceed $30-40 billion, but by 1998 they exceeded $150 billion.

The International Monetary Fund has allocated more than $110 billion to the countries of Southeast Asia to overcome the consequences of the crisis. Of which, 57 billion were provided to South Korea under strict conditions: to sell the two largest national banks to foreign companies; allow foreign banks to conduct financial transactions in Korea, and most importantly, liquidate companies (chaebols), which accounted for about a third of GDP. By 2001, the national economies of the countries of Southeast Asia had overcome the crisis and resumed growth.

2008 — ?

A new money bubble, artificially created by the authorities, is brewing in the economy, says Mikhail Khazin. If the authorities not only in Russia, but also in other countries do not have time to sense the moment when the money bubble they created will continue to grow without their help, and are late in extracting money from the economy, we will face hyperinflation, chaos in financial markets and most likely a new recession .

Since the beginning of the year, the global economy has seen an ever-widening gap - financial markets are rising, while the real sector of the economy is falling. Common sense says that such a situation cannot last forever: either the top of the scissors will pull the bottom towards itself, or, conversely, financial markets will begin to fall to the level determined by the state of the real sector, and the economy will go into a new round of crisis. To test this hypothesis, all you need to do is stop pouring public money into the economy and see if private demand returns.

As a matter of fact, all statements by representatives of the monetary authorities of the leading economies of the world, the IMF and many other “experts” about overcoming the recession in the near future pursue one single goal - the restoration of private investment demand and lending to the economy. But is it possible to restore investment demand in conditions of obvious excess production capacity? The Chinese authorities, for example, see this as one of the key problems. In fact, it is possible if you close your eyes to the fact that we are talking about the formation of a new financial bubble.

How does the current situation differ from the pre-crisis situation? Because the bubble being inflated today is man-made. Either budget or printed money is used to form it. But the further the bubble grows, the more panic both the financial authorities and market participants fall into. What happens if this man-made bubble behaves as expected? If lending to the real sector secured by financial assets resumes in pre-crisis scales and proportions, this will inevitably cause a sharp surge in inflation, with a high degree of probability capable of developing into hyperinflation.

To avoid inflation, it is necessary to accurately determine the moment when the bubble begins to operate in self-sustaining mode, and then you need to quickly begin to withdraw money from the economy that was previously thrown into it. If you do this a little earlier than it should, the economy will enter a new round of crisis. And it will no longer be possible to get her out of there, since all the resources were spent during the previous cycle. If the monetary authorities are a little late, then inflation, chaos in financial markets and, most likely, a new recession are inevitable.

As for the Russian monetary authorities, they will simply wait to see what the actions of the American Federal Reserve System, the European Central Bank and other global financial institutions will lead to. Wait and hope that the world economy will really revive and the demand for natural resources will boost Russian exports, and after them the remnants of the real sector oriented towards domestic demand.

In fact, there are several most likely scenarios for the development of the Russian economy. The first, basic one, is based on the assumption that the world economy in 2010 will be able to overcome the crisis, restart lending processes and ensure stable demand for raw materials. And this will largely depend on how Western governments manage to ensure sustainable growth in financial markets (reduce trading volatility). If financial markets normalize, the real sector of the economy will have reliable collateral for lending in the form of stocks and bonds, from the point of view of banks. The real sector will begin to grow. Then the forecast of both the Ministry of Economic Development and the Ministry of Finance for the Russian economy and budget for 2010 is justified. The increase in budget revenues in 2010 could be up to 5 percent, and the economy will grow by about 1.5-2 percent.

However, there is another option: the authorities will not be able to normalize the growth of financial markets, then the world economy will continue to decline in 2010. The Russian government will have to make a decision on devaluing the ruble. The critical moment for making such a decision will be November 2009 (until this point, devaluation of every 10 percent will provide one to one and a half additional months of financing the budget deficit from the Reserve Fund). In my opinion, this decision would be correct, since it would allow us to restart growth in the Russian economy, regardless of what is happening in the world. In the event of a late devaluation or its absence in the event of unfavorable developments in the world economy, the macroeconomic indicators of the Russian economy in the second half of 2010 will inevitably worsen, and significantly. A decline in GDP comparable to that of 2009 is possible. If the devaluation is carried out on time, the injection of money into the Russian economy can and will need to be increased, despite a significant increase in inflation.

It turns out that if foreign states succeed in the feint of restarting the global economy, Russia will again have the opportunity to “sit on the pipe.” But we won’t have any innovative path of development. If Bernanke (head of the Federal Reserve) and Trichet (head of the ECB) fail in their operation, then financial markets will inevitably begin to collapse, and with them oil prices may reach a level of 30-32 dollars per barrel or even lower. In this case, Russia risks ending up in a situation similar to the early 90s of the last century.

But we have a chance to get out of the crisis on our own through a deep devaluation of the ruble. Then we will definitely have to completely reform the economy.

Development forecasts

In contact with

The 1973 oil crisis began on October 17, 1973, when OPEC, which included all Arab OPEC members as well as Egypt and Syria, announced that it would not supply oil to countries that supported Israel in this conflict with Syria and Egypt.

This concerned primarily the United States and its allies in Western Europe.

Over the next year, the price of oil rose from $3 to $12 per barrel.

The 1973 oil crisis was the first energy crisis and is still considered the largest.

OPEC reduced oil production not only to influence world prices in its favor.

The main objective of this action was to create political pressure on the world community in order to reduce Western support for Israel.

The result of OPEC's economic pressure was a declaration by the Council of Ministers of the Common Market countries, which supported the position of the Arabs.

In addition, almost all African states have severed diplomatic relations with Israel.

The resulting political situation increased Israel's dependence on the United States and revealed the true extent of developed countries' dependence on oil prices.

At the same time, the Oil Crisis of 1973 contributed to increased oil exports to the West from the Soviet Union.

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Helpful information

Oil crisis of 1973
also known as the "oil embargo"
Hebrew משבר האנרגיה העולמי
Arab. 1973
English 1973 oil crisis

Oil crisis in the USA

In a special message to Congress on energy issues dated June 29, 1973, US President R. Nixon calls on Americans to save. They are offered to use cars less, and if they drive them, then, to save fuel, at lower speeds.

Airlines have been ordered to reduce the number of flights. The Environmental Protection Agency is temporarily lifting restrictions on the use of polluting coal.

Under the pretext of rising costs, oil companies began to significantly increase prices for gasoline and diesel fuel, as well as for aviation kerosene.

In the long term, the crisis has had a major impact on the US auto industry. Previously, American cars were large, heavy and powerful.

After the crisis, they were supplanted by Japanese models with four-cylinder engines.

Unable to withstand the competition, Detroit automakers were forced to produce lighter cars such as the Ford Pinto, Ford Fiesta, etc.