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The Mideast Oil Crisis
In October, 1973, panic gripped the United States. The crude oil-rich Middle-Eastern countries had cut off exports of petroleum to Western nations as punishment for their involvement in recent Arab-Israeli conflicts. Although the oil embargo would not ordinarily have made a tremendous impact on the US, panicking investors and oil companies caused a gigantic surge in oil prices. The situation, caused more by fear and irrationality than any firm economic basis, turned out to be one of the most memorable of the 1970s. Those who can remember the so-called "Mideast oil crisis" also remember long lines at the gas pump due to petroleum shortages and high gasoline prices.
To understand the oil crisis that gripped the world during the
1970s, we need to know a little of the history of Middle Eastern
history and politics.
After World War II, the Allied powers created a Zionist state
known as Israel to serve as a homeland for the millions of
disfranchised (property-less) Jews throughout the world. Israel
was proclaimed an independent nation by its people on May 14,
1948. The land for the new country was carved out of the
British-controlled territory known as "Palestine."
Although the Jews agreed to the settlement, the local Arabs
refused to acknowledge the Israeli state and launched frequent
attacks along its borders throughout the year 1949. The attacks
eventually escalated into a full-scale conflict known as the
"Suez-Sinai War."
The British and the French joined in on the side of the
Israelis, presumably to punish Egyptian president Gomar Nasser
for claiming control of the Suez canal, a manmade waterway
connecting the Mediterranean and Red Seas. Only by decisive
action on the part of the United Nations was the conflict
resolved. During the fighting, Israeli forces managed to capture
the Sinai Peninsula and the Gaza strip, but relinquished the
territories at the urgings of the United States and other United
Nations members.
In response to their defeat at the hands of the Israelis, the
Arabs began to unite with a common anti-Israel objective. An Arab
attack force that gathered along Israel's borders prompted
Israeli nationals to launch another offensive in 1967 which came
to be known as the "Six-Day War." Backed by Western
powers (primarily France), Israel succeeded in destroying the
Arab forces and claimed the Gaza
Strip, the Sinai Peninsula, the Golan heights, East Jerusalem,
and the West Bank from the neighboring countries of Syria,
Jordan, and Egypt.
In 1973, Arab forces led by
Egypt and Syria retaliated. Attacking on "Yom Kippur,"
the holiest of Jewish holidays, the Arabs were repulsed but
nevertheless succeeded in impressing the Soviet Union. Backed by
Soviet technology, the Arabs renewed their efforts against
Israel. Furthermore, to punish the Western powers for aiding the
Israelis, the Arab nations abruptly halted oil exports to
countries such as the United States and the Netherlands. Although
the Israelis-Arab conflict was eventually resolved with the help
of the United States, the economic impact of the cutoff of Arab
petroleum was extensive. Panic by western nations led oil prices
to be greatly inflated. "Long lines at the gas pump" is
now a phrase understood in America to describe the lack of
gasoline in the United States due to rationing of limited
petroleum imports during the 1970s.
There were more oil scares
throughout the next two decades. When the shah of Iran was
deposed during a revolution in that country, petroleum exports
were diminished to virtually negligible levels, causing crude oil
prices once again to be raised by an exorbitant amount. Further,
Iraq's invasion of Kuwait in the 1990s also inflated oil prices,
albeit for only a short time. These disturbing trends perhaps
reinforce the world's dependence on Middle Eastern oil and argue
for the development of new energy sources not tied to any
particular geographic region of the planet.
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