This Day in Green History: March 18th, 1974- Arab Nations End Oil Embargo

On March 18th, 1974, most of the Arab oil producing states ended their embargo against the United States, ending any short lived interest the average American had in gas efficiency for the next thirty plus years.

The embargo started in the thick of the Yom Kippur War on October 17, 1973 when OPEN announced that they would not be delivering oil to nations that support Israel. Oil prices soared, quadrupling in the US to $12/barrel by the next year.

Wikipedia has it:

This increase in the price of oil had a dramatic effect on oil exporting nations, for the countries of the Middle East who had long been dominated by the industrial powers were seen to have acquired control of a vital commodity. The traditional flow of capital reversed as the oil exporting nations accumulated vast wealth. Some of the income was dispensed in the form of aid to other underdeveloped nations whose economies had been caught between higher prices of oil and lower prices for their own export commodities and raw materials amid shrinking Western demand for their goods. Much was absorbed in massive arms purchases that exacerbated political tensions, particularly in the Middle East.

OPEC-member states in the developing world withheld the prospect of nationalization of the companies’ holdings in their countries. Most notably, the Saudis acquired operating control of Aramco, fully nationalizing it in 1980 under the leadership of Ahmed Zaki Yamani. As other OPEC nations followed suit, the cartel’s income soared. Saudi Arabia, awash with profits, undertook a series of ambitious five-year development plans, of which the most ambitious, begun in 1980, called for the expenditure of $250 billion. Other cartel members also undertook major economic development programs.

Meanwhile, the shock produced chaos in the West. In the United States, the retail price of a gallon of gasoline rose from a national average of 38.5 cents in May 1973 to 55.1 cents in June 1974. Meanwhile, New York Stock Exchange shares lost $97 billion in value in six weeks.

It’s notable that when you adjust for inflation, $.551/gallon gas is equal to $2.55 today. My heart aches for those poor people who had to pay over two and a half bucks a gallon for gas.

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