Other OPEC members The rise in oil prices benefited a few members of the Organization of Petroleum-Exporting Countries (
OPEC), which made record profits. Under the new Iranian government, oil exports later resumed but production was inconsistent and at a lower volume, further raising prices.
Saudi Arabia and other OPEC nations, under the presidency of
Mana Al Otaiba, increased production to offset most of the decline, and by early 1979 the overall loss in worldwide production was roughly four percent. The war between Iran and Iraq in 1980 caused a further 7 percent drop in worldwide production. OPEC production was surpassed by other exporters such as the United States, as OPEC member nations were divided amongst themselves. Saudi Arabia, a "
swing producer", tried to gain back the market share after 1985, increasing production and causing downward pressure on prices, making high-cost oil production facilities less profitable.
United States , United States, June 15, 1979 The oil crisis had a mixed impact on the United States.
Richard Nixon had imposed
price controls on domestic oil as a result of the 1973 oil crisis. Since then, gasoline price controls had been repealed, but those on domestic oil remained. The
Jimmy Carter administration began a phased
deregulation of oil prices on April 5, 1979, when the average
price of crude oil was US. Starting with the Iranian revolution, the price of crude oil rose to over the next 12 months (its all-time highest
real price until March 3, 2008). Deregulating domestic oil price controls allowed U.S. oil output to rise sharply from the large
Prudhoe Bay fields, while oil imports fell sharply. Although not directly related,
the near-disaster at Three Mile Island on March 28, 1979, also increased anxiety about energy policy and availability. Due to memories of
the oil shortage in 1973, motorists soon began panic buying, and long lines appeared at gas stations, as they had six years earlier. The average vehicle of the time consumed between two and three liters (about 0.5–0.8 gallons) of
gasoline an hour while idling, and it was estimated that Americans wasted up to of oil per day idling their engines in the lines at
gas stations. In 1979, the amount of oil sold in the United States was only 3.5 percent less than the record set for oil sold in 1978. On July 15, 1979, President Carter outlined his plans to reduce oil imports and improve
energy efficiency in his "Crisis of Confidence" speech, sometimes known as the "
malaise" speech. In the speech, Carter encouraged citizens to do what they could to reduce their use of energy. He had already installed water tank heating solar panels on the roof of the
White House and a
wood-burning stove in the living quarters. The panels were removed in 1986, reportedly for roof maintenance, during the administration of his successor,
Ronald Reagan. A speech Carter gave in April 1977 argued that the oil crisis was "
the moral equivalent of war". In November 1979, Iranian revolutionaries seized the American Embassy, and Carter imposed an embargo on Iranian oil. In January 1980, he issued the
Carter Doctrine, declaring: "An attempt by any outside force to gain control of the
Persian Gulf region will be regarded as an assault on the vital interests of the United States". Additionally, as part of his administration's efforts at deregulation, Carter proposed removing price controls that had been imposed by the
Richard Nixon administration before the 1973 crisis. Carter agreed to remove price controls in phases. They were fully dismantled in 1981 under Reagan. Carter also said he would impose a windfall profit tax on oil companies. According to a 2019 study, individuals who were between the ages of 15 and 18 during the 1979 oil crisis were substantially less likely to use cars once they were in their mid-30s.
Other oil-consuming nations In response to the high oil prices of the 1970s, industrial nations took steps to reduce their dependence on the Organization of Petroleum-Exporting Countries (OPEC) oil. National governments initiated multibillion-dollar research programs to develop alternatives to oil and commercial exploration developed major non-OPEC oilfields in Siberia, Alaska, North Sea, and the Gulf of Mexico. By 1986, daily worldwide demand for oil dropped by 5 million barrels but, non-OPEC production rose by an even-larger amount. Consequently, OPEC's market share reduced from 50 percent in 1979 to 29 percent in 1985.
Automobile fuel economy At the time, Detroit's "Big Three" automakers (
Ford,
Chrysler,
GM) were marketing downsized full-sized automobiles like the
Chevrolet Caprice, the
Ford LTD Crown Victoria and the
Dodge St. Regis which met the
CAFE fuel economy mandates passed in 1978. Detroit's response to the growing popularity of imported compacts like the
Toyota Corolla and the
Volkswagen Rabbit was the
Chevrolet Citation and the
Ford Fairmont. Ford replaced the
Ford Pinto with the Ford Escort and Chrysler, on the verge of
bankruptcy, introduced the
Dodge Aries K. GM was having unfavorable market reactions to the Citation and introduced the
Chevrolet Corsica and Chevrolet Beretta in 1987 which sold better. GM also replaced the
Chevrolet Monza, introducing the 1982
Chevrolet Cavalier which was better received. Ford experienced a similar market rejection of the Fairmont and introduced the front-wheel-drive
Ford Tempo in 1984. Detroit was not well prepared for the sudden rise in fuel prices, and imported brands, primarily the Asian models, which were mass-marketed and had a lower manufacturing cost as opposed to
British and
West German brands. The rising value of the Deutsche mark and British pound resulted in the transition to the rise of Japanese manufacturers as they were able to export their product from Japan at a lower cost, resulting in profitable gains, despite accusations of
price dumping, and were now more widely available in North America, and developing a loyal
customer base. A year after the 1979 Iranian Revolution, Japanese manufacturers surpassed Detroit's production totals, becoming first in the world. The share of Japanese cars in U.S. auto purchases rose from 9 percent in 1976 to 21 percent in 1980. Japanese exports later displaced the automotive market once dominated by lower-tier European manufacturers (
Renault,
Fiat,
Opel,
Peugeot,
MG,
Triumph,
Citroen). Some declared bankruptcy (e.g. Triumph,
Simca) or withdraw from the U.S. market, especially in the wake of
grey market automobiles or the inability of the vehicle to meet DOT requirements, from emission requirements to automotive lighting. Many imported brands utilized fuel-saving technologies such as
fuel injection and
multi-valve engines over the common use of
carburetors. The overall fuel economy of cars in the United States increased from about in 1979 to by 1985 and by 1990. This was one factor leading to the subsequent
1980s oil glut. ==See also==