Oil and Economic Crisis

Published: 1973
Play Audio Archive Story - UPI

Unknown Speaker: "We've heard of black power, we've heard of Indian power we, we've heard of green power, we've heard of woman power. Let's leave here and show the country and the cost-of-living council what pump power is."

Announcer: The summer of '73 made many Americans realize that the fuel shortage was a real thing. The man you just heard was protesting that many independent gas stations had to close down on weekends or at least limit their sales of gasoline during the summer months. Some station owners charge as much as $1 for a gallon of gas.

But before winter set in, things had gotten worse. The President asked all gas stations to close down on Sundays. The situation became critical because of the Mideast War. Arab nations announced a monthly reduction by 5% of the petroleum they would ship to countries known to be friendly with Israel.

President Richard M. Nixon: "Because of that war, most of the Middle Eastern oil producers have reduced overall production and cut off their shipments of oil to the United States. By the end of this month more, than 2 million barrels a day of oil we expected to import into the United States will no longer be available. We must therefore face up to a very stark fact: we are heading toward the most acute shortages of energy since World War II. Our supply of petroleum this winter will be at least 10% short of our anticipated demands, and it could fall short by as much as 17%."

Ed Karrens: In some countries like the Netherlands, driving was banned completely on Sundays.

While driving was not banned in the United States, the President did request highway speeds be lowered.

President Richard M. Nixon: "Consistent with safety and economic considerations, I am also asking Governors to take steps to reduce highway speed limits to 50 miles per hour. This action alone, if it is adopted on a nationwide basis, could save over 200 thousand barrels of oil a day, just reducing the speed limit to 50 miles per hour."

Ed Karrens: And the President made one more suggestion that would affect everyone who uses oil for heat if they complied with him.

President Richard M. Nixon: "To be sure that there is enough oil to go around for the entire winter all over the country, it will be essential for all of us to live and work in lower temperatures. We must ask everyone to lower the thermostat in your home by at least 6 degrees so that we can achieve a national daytime average of 68 degrees. Incidentally, my doctor tells me that in a temperature of 66 to 68 degrees, you're really more healthy than when it's 75 to 78, if that's any comfort."

Ed Karrens: The fuel shortage which started in 1973 was only half of the energy crisis story. Blackouts and brownouts were a definite possibility if people didn't conserve electricity. The President appealed to everyone to turn off lights or electrical appliances when they weren't needed. Many cities announced they would curtail their Christmas decorations, and Congress voted that the country return to Daylight Savings Time during the winter months.

The old adage about people complaining about the weather but never doing anything about it didn't hold true for the price of meat in 1973. When meat prices began to soar early in the year, a meatless week was proclaimed by people all across the country.

Unknown Speaker: "We are all going to boycott meat as -- for as long as we can and for as much as we can during the month of April, meaning that some of us will continue to not buy meat at all throughout the entire month, and others are going to limit severely their consumption of red meat. And we're going to continue this not just through April, but until we accomplish the goal."

Ed Karrens: The meat industry felt the impact of a weeklong boycott, but prices continued to rise until President Nixon made this announcement.

President Richard M. Nixon: "I am ordering a freeze on prices. This freeze will hold prices at levels no higher than those charged during the first eight days of June. It will cover all prices paid by consumers. The only prices not covered will be those of unprocessed agricultural-processed products at the farm levels and rents. Wages, interest, dividend, will remain under their present control systems during the freeze."

Ed Karrens: While the prices held during the freeze, some people still looked for other ways to relieve their pocketbooks. Some turned to eating dog food as a protest against the prices, and an isolated few said they were supplementing their meat diet with plain old horsemeat.

In the face of the rapidly snowballing international monetary prices, the U.S. moved to devalue the dollar by 10% in 1973. The Administration said the devaluation would be a benefit to the nation and its workers and businesses. The move was made to give the United States more equilibrium in international accounts.

John Wilson, Senior Vice-President of The Chase Manhattan Bank, explained how the devaluation would affect the United States.

John Wilson: "Devaluation ought to improve U.S. exports, but again only over some period of time. For some imports coming into this country, there will be an increase in the price. It will mean higher costs as far as the American traveling abroad is concerned in those areas where as exchange-rate change has occurred."

Ed Karrens: Despite the gloom domestically, internationally the United States took strides to improve relations with the two giants of the Communist world, China and Russia. Party leader Leonid Brezhnev visited the United States for summit talks with President Nixon. Nine agreements were signed during his stay in June. In the most important agreement, Nixon and Brezhnev agreed to try to avert military confrontation which might lead to a nuclear war between Russia and the United States or a third country. They both agreed to accelerate the SALT Talks and complete a new arms-limitation treaty by the end of 1974.