3.2 - Oil crisis and foreign competition Flashcards
(10 cards)
Americans consumed 1/3 of the world’s oil, and about 30% was imported, mainly from the Middle East. Why might this make the USA vulnerable?
This reliance makes the US vulnerable as most transportation methods at the time or other goods required oil, therefore if conflict occurred that cut off the US’s supply of oil, it could have widespread detrimental impacts.
- What happened in 1973 and how did this affect the price of oil in the USA?
In 1973 the Yom Kippur war broke out and Nixon support of Israel led to an organisation of petroleum exporting countries (OPEC) oil embargo on the United states. The end of the embargo was followed by a 387% increase in the price of oil that greatly damaged the American economy except for U.S. oil companies. Americans now paid around 30% more for heating oil and petrol.
- Why are strikes in 1974 by independent truckers and in 1977 by mineworkers a good indicator of the economic crisis in that period?
- In 1974 a strike by 100,000 independent truckers demanding lower fuel prices brought the nation’s roads to a standstill for 11 days and left stores with empty shelves.
- In late 1970 seven 165,000 United Mine Workers began a three month strike. The consequent coal shortage led to school closures and shortened working weeks in the eastern USA.
These strikes are a good indicator of the economic crisis in that period because they reflect the challenges for the US economy and also demonstrate how important coal and oil were.
- In late 1970 seven 165,000 United Mine Workers began a three month strike. The consequent coal shortage led to school closures and shortened working weeks in the eastern USA.
What happened in Levittown, Pennsylvania in 1979, and why might this be regarded as symbolic of American decline?
In Levittown, Pennsylvania in 1979, the first American energy riot occurred when truckers barricaded expressways leaving 100 injured and 170 arrested in two nights of violence. This was symbolic of American decline as it showed that the American economy were not performing as well as they had previously done unable to address their economic issues, and with the increase in prices showing a weakness in the economic standing of the USA
Why was the changing price of oil so significant for the American economy?
The changing price of oil was so significant for the American economy because it symbolised the end of an era of cheap energy that hit American standard of living. Probably 1/3 of the alarming rise in prices was due to the increased cost of oil. Cheap oil had been vital to post second war prosperity and economic growth helping industry and accelerating social transformative suburbanization and consumerism.
How did this lead to the growing sense of political disillusionment?
The energy crisis provided politicians with an apparently insoluble problem but voters wanted them to do something about it. One obvious way to decrease energy consumption was to raise taxes on oil but voters disliked increased energy prices. The inability of politicians to solve this conundrum contributed to the growing political disillusionment.
- What is a trade deficit, and what was the US trade deficit by 1979?
Trade deficit: the country is importing more goods and services than it is exporting
How did Americans respond to increasing foreign competition?
Americans reacted uneasily to foreign competition such as:
* Some attacked Toyotas with sledgehammers
* United Auto workers asked President Carter to restrict Japanese car imports
* Some sported ‘Buy American: the job you save may be your own’ bumper stickers
However this was all to no avail
Many American companies moved production abroad or bought finished products from foreign manufacturers for whom labour was cheaper and less assertive
However despite many Americans feeling as though they were economically squeezed, the US easily remained the world’s most affluent society with a far higher GNP than its nearest rivals
- Why did Japanese cars start to take over the American market?
- Inexpensive and well-made Japanese car imports were extremely attractive to American consumers
- Japanese companies had 23% of the US automobile market by 1981
- American car companies were slow to adapt to this change
Therefore while the sales of American cars fell, manufacturers continued to produce ‘gas guzzlers’ which used large quantities of fuel while Japanese cars were smaller and more economic
How did this affect Chrysler and the car industry in Detroit?
Chrysler lost billions and needed a controversial $1.5billion government bailout in 1980
* Number of permanent jobs in automobile industry fell from 940,000 in 1978 to 500,000 in 1982
Unemployment reached 24% by 1980 in the car manufacturing city of Detroit
