The Great Oil Shock of 1973 1973: THE GREAT OIL SHOCK I Introduction

In 1973, as a protest of US support for Israel in the 1973 Arab-Israeli War, the Arab members of the Organization of Petroleum Exporting Countries (OPEC) agreed to an embargo on oil exports to the United States. Gasoline prices in the US immediately shot up, and panic buying led to frequent local shortages. To Americans it was a revelation of helplessness, and what was regarded as blackmail by distant foreign countries. Coming as it did after failure in Vietnam, it was even seen as marking the beginning of American decline in the world.

In the Arab and Islamic world, however, and indeed in much of the Third World, the 1973 oil embargo was viewed very differently. The oil-producing countries had asserted control over their own natural wealth, and shaken off the domination of the Western-dominated international oil companies. This seemed to presage a vast transformation in the political and economic power relations between the industrialized West and the Third World. From now on, the relationship would be o

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ce is essentially identical to one from any other source. While individual wells and fields produce oil of varying quality, but globally there are numerous sources for crudes of all grades (Al-Otaiba, 1975, p. 11). Thus, if Producer A is unwilling to sell to Consumer B, the consumer can simply buy oil from Producer C. Moreover, while OPEC nations controlled the major share of world oil production in 1973, with Arab producing nations who supported the embargo counted for much of that share, they did not control its distribution. Since there was still a substantial share of non-embargoed production flowing into the world market, it was a simple matter for the international oil firms -- who controlled distribution -- to adjust distribution patterns, if need be diverting oil under embargo to non-embargoed customers, and non-embargoed oil to embargoed customers. Indeed, without knowing the exact movements of tankers at sea, the nations supporting the embargo had little control over where the oil they sold was actually going. Even if they did know, oil could simply be pumped into storage tanks at a non-embargoed terminal, then pumped back into some other tanker to carry it to an embargoed customer. The embargo itself was ther
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Approximate Pages = 20 (250 words per page)