VI
Mark học AIOct 1973 – Mar 1974 · a supply shock every oil-importing country lived through
Source: US State Department Office of the Historian, "Oil Embargo, 1973–1974"; Federal Reserve History, "Oil Shock of 1973–74" (price from about $2.90 to $11.65 a barrel).
Source: FRUS 1969–1976 vol. XXV, doc. 200 (OAPEC 5% monthly cuts); US Defense Department memo of 24 Oct 1973 in the CIA Reading Room (estimate of 4 million b/d, 9%); Federal Reserve History ($2.90 → $11.65); Bernanke, remarks of 4 Jun 2008 (price controls and lines); 1974 IEP Agreement (90 days, via secondary sources); 1975 EPCA per the US Department of Justice and CRS.
The world did not run out of oil in 1973. So why did a shortfall of about a tenth nearly quadruple the price, and send people into lines for gasoline? Because in the short run almost nobody can use less oil right away, so the price has to jump very far to balance. Where the price was held down, the shortage showed up as lines.
Source: the 9% estimate from the US Defense Department memo of 24 Oct 1973 (CIA Reading Room); prices from Federal Reserve History; lines from Bernanke 2008. The answer is Mark's reading using basic supply and demand.
Posted price of the benchmark Arabian Light crude: the price exporters listed, not the price at the pump.
Source: CIA Reading Room, posted price table (1971, 1974); IAEA country profile of Japan (77.4%); FRUS vol. XXV, preface and doc. 200 (war, 16 and 17 Oct); Office of the Historian, "Oil Embargo, 1973–1974" (embargoed countries, lifted March 1974); Federal Reserve History (19 Oct) and chronologies (20 Oct; secondary source); 24 Oct 1973 memo in the CIA Reading Room; Bernanke 2008 (price controls Nov 1973); NBER (cycle Nov 1973–Mar 1975); Nixon's signing statement of 2 Jan 1974 (American Presidency Project); FRUS vol. XXXVI, doc. 318 (conference); UPI and AP, 18 Mar 1974 (date embargo lifted; secondary source); IEP Agreement via secondary sources (18 Nov 1974); US Department of Justice, ENRD (EPCA, first oil 1977).
Four decisions, seen through the eyes of the time: who decided, what they knew, what they chose, and what happened next. No judging with hindsight.
Source: FRUS vol. XXV, doc. 200; 24 Oct 1973 memo (CIA Reading Room); Office of the Historian, "Oil Embargo, 1973–1974"; the 18 March date per UPI (secondary source).
Source: FRUS vol. XXV, doc. 200; CIA Reading Room, posted price table; Federal Reserve History; Bernanke 2008 ($3.20 and nearly $14).
Source: Bernanke 2008; signing statement of 2 Jan 1974; EIA Monthly Energy Review table 9.4 (1973) and US Department of Energy AFDC (1974), leaded regular, including taxes.
Source: FRUS vol. XXXVI, doc. 318; CVCE, Michel Jobert press conference, 13 Feb 1974; the IEP Agreement and France's initial absence via secondary sources (CORES, Wikipedia).
Nobody can prevent the next shock. Oil importers learned to build buffers so that a shock does not become a crisis.
In 2008, Fed Chairman Ben Bernanke recalled the image of gas lines in the 1970s and tied it to price controls: when prices are not allowed to rise, gasoline gets rationed by waiting. He also compared: after the 1973 shock, US inflation rose by about 6 percentage points.
Many countries later chose to let prices reflect the shortage and to help vulnerable people directly, instead of holding prices down for everyone. That is a policy trend, not a formula that is right everywhere.
Source: Bernanke, "Remarks on Class Day 2008", Federal Reserve, 4 Jun 2008. The last sentence is Mark's comment.
13 things people often say about the 1973 oil crisis, checked against named sources. Tap each line for the reasoning.
From about $2.90 to $11.65 a barrel by January 1974 (Federal Reserve History). The State Department's Office of the Historian: the price "first doubled, then quadrupled".
Office of the Historian, "Oil Embargo, 1973–1974": it banned oil exports to these countries and included output cuts.
Office of the Historian and Federal Reserve History. Bernanke (2008): imported oil was about $3.20 in 1972 and nearly $14 in 1975.
Nixon's signing statement of 2 Jan 1974: the main purpose of the law was to reduce gasoline and diesel use; states wanting highway funds had to set a 55 mph maximum.
Agreement on an International Energy Program (Nov 1974): at least 90 days of net imports; in a severe shortage, release stocks, restrain demand, share supplies (via secondary sources, as the IEA site was blocked in the working environment).
EPCA signed 22 Dec 1975; first oil entered the reserve on 21 Jul 1977, about 412,000 barrels (US Department of Justice, ENRD).
The output cuts and embargo were decisions of OAPEC, the group of Arab oil exporters. The 16 October 1973 price rise was by six Persian Gulf OPEC members (FRUS vol. XXV, doc. 200). Two organisations, two kinds of decision.
Right order of magnitude, but these are posted prices, and the starting point depends on the source: about $2.90 (Fed, mid-1973) or $3.01 (FRUS, just before 16 Oct). The end point is $11.65 (1 Jan 1974). Spot prices at the tightest moments sometimes differed from posted prices.
The embargo cut supply. But Bernanke (2008) points out that price controls meant gasoline was rationed by waiting instead of by price. Economists still debate which part mattered more.
Federal Reserve History: oil complicated an inflation picture that already had many causes (Fed Chairman Burns listed Vietnam War spending, dollar devaluations, the 1972–73 boom, rising food prices).
IAEA: oil's share of Japan's primary energy fell from 77.4% (1973) to 49.7% (early 2000s). A big, real change. But "best" is a comparison no source here proves.
The oil underground did not shrink in October 1973. What was cut was the amount offered for sale, by decisions to cut output and embargo (FRUS vol. XXV, doc. 200). Demand was slow to fall, so prices jumped; where prices were held down, the shortage became lines (Bernanke 2008).
The embargo targeted certain countries. By the estimate at the time, supply fell by a net 4 million barrels a day, roughly 9% (US Defense Department memo, 24 Oct 1973). Most oil kept flowing, at much higher prices.
Source: as noted in each line; full list in Part 9.
Scores are Mark's assessment based on the sources in Part 9, not data from a study. Mark scores how importing countries responded, not the parties to the war.
Total 11/20 (Mark's assessment). Fumbling at first, then very thorough learning.
Source: IEA in Nov 1974 after the Oct 1973 crisis (IEP Agreement, via secondary sources); EPCA 1975 (US Department of Justice, CRS); IEA release of March 2026 (six times); IAEA (77.4%); Bernanke 2008; CVCE (France).
Dependence on imported oil was no secret in 1973: in Japan, oil was nearly four fifths of energy. But almost no importing country had a large enough reserve or a sharing mechanism in place. The buffers were built only after the shock.
To be fair: oil had been cheap for years before 1973, so spending money on stockpiles looked like waste. This is exactly the kind of risk that is easiest to ignore.
The "More" section is Mark's comment, based on the sourced facts in Parts 2 and 4.
For any team that relies on one "can't do without" thing: a supplier, a big customer, the one person who knows how, a tool.
1. What would freeze your team if it disappeared for a week? How many sources are there for it?
2. What are the team's "days of survival" if that source breaks? Who knows this number?
3. When did the team last try the backup? If never, assume you don't have one.
4. When short, is the team "holding the price": acting as if all is fine, so the shortage shows up as missed deadlines?
5. Is there a team you have already agreed to back up, and that will back you up?
Government records, central banks and international organisations first. Secondary sources are labelled. The working environment blocked the original sites (history.state.gov, iea.org, cia.gov, eia.gov, federalreserve.gov), so the primary sources below were checked against excerpts of those same sites in search results, not opened in full.