Oil Shock

Long-haul trucker J.W. Edwards was fed up. As he slowed along Interstate I-80 in Pennsylvania, his semitruck’s tank was running out of gas. He then guided the vehicle into the middle of the freeway. Soon the truck was empty of fuel. When it stopped, it completely blocked the eastbound lanes.

Traffic began building up behind him. Edwards then grabbed the microphone on his truck’s radio and broadcast his reason for blocking the roadway. He was protesting the soaring price of gas and diesel fuel brought on by the Arab Oil Embargo of 1973. The embargo had begun two months earlier. Limited fuel supply forced the Kansas trucker to stop at nearly every filling station along his route to New York. He’d had enough of it.

News of Edwards’ protest spread. In response, truckers on a handful of the nation’s highways joined in, causing traffic jams of their own. Such instances of protest and chaos were common on the roads and at the pumps during the 1973 embargo. During a six-month period, Arab members of the Organization of Petroleum Exporting Countries (OPEC) halted shipments of oil from the Middle East. They did so in response to America’s military support for Israel.

The ordeal had lasting outcomes. It shaped the U.S. energy landscape for years to come. After things settled, the nation relied less on foreign oil and invested more in other sources of energy. It also had a lasting impact on the American psyche. It made citizens aware of the reality that a key asset such as oil couldn’t be taken for granted.

“Americans hadn’t thought about where their oil came from before 1973,” says Yale University oil historian Gregory Brew. “They assumed it was secure and that it was going to be cheap forever, so the fact that it was suddenly being used by foreign states as a weapon . . . came as an immense economic but also psychological shock to the American people.”

Oil has been an essential building block of our lives since the early 20th century. It’s used to run cars, heat homes and buildings, and power manufacturing plants—and has in many ways fueled the development of modern industrial society.

“Everything we use or consume is made from oil or natural gas,” says University of Iowa oil historian Tyler Priest. “Everything you’re wearing, the toothpaste you brush your teeth with, and the carpet in your bedroom.”

Oil has been a key building block of our lives since the early 20th century. It’s used to run cars, heat homes and buildings, and power manufacturing plants. In many ways, it also has fueled the development of modern industrial society.

“Everything we use or consume is made from oil or natural gas,” says University of Iowa oil historian Tyler Priest. “Everything you’re wearing, the toothpaste you brush your teeth with, and the carpet in your bedroom.”

Up until the late 1960s, the U.S. extracted most of its oil at home. As a result, the country didn’t rely much on foreign sources. Things changed when domestic oil production peaked in 1970. Afterward, the U.S. began importing more oil from other countries. By 1973, OPEC provided 30 percent of America’s oil. The cartel had existed since 1960. That year, five nations—Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela—banded together to control the supply and price of oil. They also worked to secure fair prices for producers.

In October 1973, Egypt and Syria launched a surprise attack on Israel. The attack became known as the “Yom Kippur War.” The U.S. had been an ally of Israel since its founding in 1948. So the U.S. supported Israel by supplying weapons and money.

OPEC announced a 5 percent monthly decrease in oil output and stopped exporting oil to the U.S. in retaliation. It also later stopped exporting to other nations, including the Netherlands, Portugal, and South Africa. As a result, U.S. oil prices increased fourfold, from about $3 a barrel to nearly $12 a barrel. Within a few months, gas prices soared by 40 percent.

Afraid that gas stations would run out of fuel, Americans began panic buying to try to keep their tanks full. Fights broke out at pumps, and some people stole fuel out of cars. Long lines stretched around the block. Sometimes, the lines went on for miles.

The rise in fuel prices didn’t affect just drivers. As transportation and manufacturing costs went up for business, the prices of many everyday goods spiked too.

“The era of low-cost energy is almost dead,” Secretary of Commerce Pete Peterson said in 1973.

The government took measures to conserve oil. Lawmakers lowered speed limits to force drivers to use less fuel. Rationing went into effect: Car owners with license plates ending in an odd number could buy gas on odd-numbered days of the month, and those with even-numbered plates on even-numbered days.

President Richard Nixon asked gas stations to stop selling fuel from Saturday night through Monday morning. Some states even advised families not to put up Christmas lights that year to save electricity.

“This year we will drive a little slower,” Nixon said at the 1973 lighting of the White House Christmas tree. The entire tree stood dark, save a single star on the top. “This year the thermostats will be a little lower. This year every American perhaps will sacrifice a little.”

The rise in fuel prices didn’t affect just drivers. As transportation and production costs increased for businesses, the prices of many everyday goods also spiked.

“The era of low-cost energy is almost dead,” Secretary of Commerce Pete Peterson said in 1973.

The government took measures to save oil. Lawmakers lowered speed limits to force drivers to use less fuel. Rationing also went into effect. Car owners with license plates ending in an odd number could buy gas on odd-numbered days of the month. Those with even-numbered plates had to wait until even-numbered days to buy gas.

President Richard Nixon asked gas stations to stop selling fuel from Saturday night through Monday morning. Some states even urged families not to put up Christmas lights that year to save electricity.

“This year we will drive a little slower,” Nixon said at the 1973 lighting of the White House Christmas tree. The entire tree stood dark, except for a single star on the top. “This year the thermostats will be a little lower. This year every American perhaps will sacrifice a little.”

OPEC lifted the embargo in March of 1974. The move came after the U.S. agreed to help work out a military disengagement deal between Syria and Israel. But the oil shock changed the way Americans think about energy sources.

Before the embargo, “gas guzzling and cheap gas was the lifestyle,” Priest says. People drove in cars that got seven to ten miles per gallon. But after the embargo, energy efficiency and independence became major priorities. Congress passed new standards requiring automakers to raise vehicle mileage on new cars from 13.5 miles per gallon to 27 miles per gallon. Gas guzzlers were then replaced by more fuel-efficient vehicles.

The U.S. invested more in renewable energy sources, such as wind and solar power, and nuclear energy. The country also began drilling for more oil at home. New technologies like fracking took off.

Today the U.S. is less dependent on oil from OPEC. In 2021, OPEC’s share of U.S. total petroleum imports amounted to only about 11 percent. Even so, global decisions and events still affect the U.S. oil supply and gas prices.

“Energy is a global market,” Brew says, “and shocks in one part of the world can be felt on another side of the world.”

For one, the pandemic caused supply chain snags. Those disruptions led to oil shortages and soaring gas prices. As a result, there were long lines of cars waiting at pumps once again. And when the war in Ukraine began, the European Union, the U.S., Canada, and the U.K. all agreed to largely stop buying Russian oil. This move also affected the prices of gas and other goods across the nation.

But just as in the case of the 1973 embargo, Brew says there’s a potential bright side to today’s oil shocks: They continue to push the U.S. and the world toward cleaner and more sustainable energy.

“The shock from Russia’s invasion of Ukraine is being felt everywhere,” says Brew. “This crisis we’ve experienced will accelerate the transition away from fossil fuels. I think we’re going to be using less oil in the years ahead.”