The OPEC Oil Embargo at 40
Forty years ago, when OPEC's Arab members cut off oil supplies to the US and parts of Europe, governments encouraged innovative solutions to reduce oil dependence. Today, as the world's ongoing oil addiction accelerates climate change, it is up to markets to lead the charge toward a more sustainable clean-energy future.
DENVER – Forty years ago, the United States and much of Europe learned difficult lessons about their dangerous addiction to fossil fuels. Following Israel’s victory in the Yom Kippur War, the Arab members of the Organization of the Petroleum Exporting Countries (OPEC) announced an oil embargo on Israel’s supporters. Developed countries, faced with the sudden cutoff of a key energy source and a major spike in world oil prices, felt powerless.
But, as it turned out, developed countries did have options for reducing their dependence on Arab oil. They just had not recognized – or had not cared to recognize – the need for action until OPEC had them over a barrel.
While consumers waited in long lines – and even fought – to fill their gas tanks, governments attempted to encourage innovative solutions by, for example, raising efficiency requirements for automobiles and certain appliances, like refrigerators. In 1977, the US created the Department of Energy (DOE); a year later, it enacted the National Energy Act, which employed tools like industrial regulation and tax incentives to promote fuel efficiency and renewable energy.