The 1970s energy crisis began under the Richard Nixon Administration and it got worse during the Presidency of Jimmy Carter. In both cases, the crisis was related only to the petroleum industry and their main derivative products: gasoline and diesel oil as they became scarce, with their prices soaring up high. However, it did not affect AC electricity production, because 90% of power plants in the United States were coal-fired thermoelectric, nuclear, and hydroelectric power plants. During this period, the American currency, the dollar, weakened, in comparison with other currencies, because the United States government had pulled out of the Bretton Woods Accords, abandoning the Gold Standard by which the US dollar had been backed up.
Cause of Energy Crisis during Nixon Government
At the end of October 1973, the OPEC (Organization of Petroleum Exporting Countries) imposed an oil embargo on the United States of America. The reason for this sanction is that the Arab countries accused the US government of having assisted Israel with Intelligence and military equipment during the 1973 Yom Kippur War. Due to the embargo, the price of oil had risen 300% by March 1974. The oil barrel increased from U$D 3 to more than U$D 12 by mid 1974. Although the embargo was lifted in March 1974, the barrel of petroleum kept climbing up until June that year.
Cause of Energy Crisis during the Carter Administration
The oil scarcity during the Carter Administration did not arise out of an embargo imposed on the Western countries but out of a sharp drop in global world production of this commodity. The cause of this oil production decrease was the Iranian Revolution. Until then, Iran had been one of the main producer of petroleum but due to the political and cultural upheaval that took place in Iran from January 1978 to April 1979, Persia, as it was formerly called, stopped producing oil for more than a year. This triggered a sharp increase in the price of oil barrel, causing gasoline and diesel oil shortage in American and Europe. The 1979 energy crisis contributed to the inflationary spiral that took place during the Carter Administration.
The petroleum-related energy crisis of the 1970s would lead to a deregulation of the oil industry in the United States of America during the Reagan Administration. It would be accompanied by government policies that promoted the increase of American oil production and the storage capacity of the US Strategic Petroleum Reserve, which had been created in 1975 during the Gerald Ford Administration.
Below, a long line of cars waiting to fill her up in California, in 1970s energy crisis. Those were big automobiles, with powerful engines which guzzled a lot of gasoline. From then on, many people would start buying smaller Japanese cars.
