The economy of the United States and of the entire world becomes vulnerable when there are unplanned and abrupt interruptions to oil supply. One of the instances, when oil prices have soared to unimagined heights, is the oil embargo of 1973. It was referred to as an “energy crisis,” and it dictated the control and pricing of petroleum in the United States. Before 1973, the Texas Railroad Commission managed oil prices. The select few large oil companies developed large oil fields in foreign countries at reasonable prices. They tried to achieve the goal of stable and affordable oil prices since the industrialized world had an increase in oil demand. The Organization of Petroleum Exporting Countries (OPEC) soon took over the role and paved the way for the 1973 embargo. The resultant high oil prices led to a decrease in oil demand in the United States since consumers turned to more energy-efficient cars (Difiglio, 2014).
Such oil spikes have caused economies around the world to plummet. In the case of the 1973 embargo, for instance, Americans were forced to spend less on other goods and services. High oil prices also caused people to spend less on motor vehicles out of what they had set aside as disposable income (Difiglio, 2014). Everything that spelled luxury was over for the American people. They had to put a hold on fancy cars, limitless consumption, and big suburban homes. Americans were forced to rely on nearly half of their normal energy needs. The country’s supply was mostly made up of imports. There was an increased vulnerability to shortages and scarcity of other goods and services (Ryssdal, 2016). People were forced to wait in long and winding lines for gasoline. Some even had to wake up early to be the first ones in line, only to get a few cars closer to the pump and find that gasoline was over. Consequently, the Federal Reserve raised and lowered interest rates several times, so much that business owners found it hard to make future plans. This caused many companies to keep their prices high, which then led to increased inflation. They also refrained from hiring new workers. Americans were forced to embrace energy-saving means between 1974 and 1975 (Amadeo, 2015).