Economic Crisis: Oil Shock 1979.

Economic Crisis: Oil Shock 1979

This particular oil crisis that took place in 1979 was crucial because of the fact there was one just six years before. It was also called “the second oil shock”, the first oil crisis was in 1973 and many people bought out all the oil thinking it was going to run out, which in fact made things worse. Americans wasted about 150,000 barrels of oil per day waiting in the extremely long lines at gas stations just running their engines. American car manufacturers made the large “gas guzzling” cars which made is hard for Americans to keep fueling their vehicles. The Japanese car companies such as Toyota and Honda became more popular due to them being smaller and more fuel efficient cars. In 1979 the oil production decreased by only -4% but with the reaction of the price of one barrel of oil to $39.50 over the next twelve months, where before the price was just $15.85 in the United States. The oil crisis had different effects on different parts of the country with some states being the ones who produce the oil, then the others who use for factories, machines, cars, etc. How did it all start in 1979? With America short of oil we must get it from another country, Iran. On January 16, 1979, the leader (Shah) of Iran was removed from power, and Ayatollah Khomeini came to power. He cut Iran's oil production, which reduced shipments of oil to the United States. An embargo was made against the United States, which means a production of a product is runned by the government and prevents it from being exported to certain countries. This also affected Iran considering this is where we got most of our oil from. Much of the workers were quite upset with the outcome, leading about 37,000 workers to go on strike for their jobs. An organization was founded in 1960 called Organization of Petroleum Exporting Countries (OPEC), this consisted of the mass producing countries including Iran, Iraq, Kuwait, Venezuela and Saudi Arabia. They all joined forces and the previous oil shock was directed because of their actions. Many knew the prices were going to increase by two to four dollars but then them being in control they increased prices drastically. Although, they took blame for the one in 1973, the second was placed because of the domestic events going down in Iran. Many things have changed for the better, maybe if not for this crisis people wouldn’t realize we don’t need oil for the production of everything. Later, solar and nuclear energy became a popular energy source as a replacement for oil. Also,