Oil Embargo Pros And Cons

To begin with, one of the weakest times in America was during the late 1970s. For a whole year, America was placed under an oil embargo by the Organization of Petroleum Exporting Countries, also known as OPEC (Oil Embargo...). An embargo is a ban on trading with a particular country. OPEC is comprised of the "Islamic Republic of Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Qatar, Indonesia, Libya, the United Arab Emirates, Algeria, Nigeria, Ecuador, and Gabon" (Member Countries). The main reason OPEC placed an embargo on the US was that they resupplied the Israeli army. It all started when President Nixon ended an agreement that pegged the US dollar at the same price as gold, making the price of gold soaring and the price of the dollar to plummet.

"The cost of imports that were denominated in other currencies stayed the same or rose" (Amadeo "The Surprising Decline..."). OPEC, at this point, thought about, instead of the dollar, pricing oil in gold to prevent profits from disappearing. OPEC used its oil as a "political weapon" and injured the US. OPEC owns 78 percent of conventional crude oil reserves, and that is how they can control most of the oil trade with the US. The US was not the only country that was placed under an embargo. Many countries did not affiliate themselves with Israel or the US because they did not want to in the same spot as America ("oil embargo..."). OPEC'S embargo of 1973 caused oil prices to escalate. One barrel of oil went from $2.90 a barrel to $11.65 a barrel (Amadeo "The Surprising Decline..."). With the rise of oil prices and few other factors, America was thrown into a recession, a state of economic discovery. Throughout this time the unemployment rate climaxed at nine percent. (Amadeo "The History of Recession..."). Employees were laid off and could not find another job since employers were afraid to hire (Amadeo "The Surprising

For example, it did not help that the oil generation in America declined as a percent of world output. People now had a lack of confidence in their government. People changed how they lived because they felt they government failed at trying to resolve this issue. Americans had less money to spend, so they spent less money on other products and services, which decreased demand and worsened the recession. Everyone who owned a vehicle waited in lines to get their hands on gas. They woke up early and waited all day in line for a full tank of gas. "Gas stations posted color-coded signs: green when gas was available, yellow when it was rationed, and red when it was gone. States introduced odd-even rationing: drivers with license plates ending with odd numbers could get gas on odd-numbered days"(Amadeo "The Surprising Decline..."). People were angry with the shortage and demanded change. 55 mph was now the national speed limit, and daylight savings was initiated year-round to conserve gasoline. Also, Fuel Economy Standards were put into play. OPEC could now regulate the world's oil supply and keep prices stable (Amadeo "The Surprising