HISTORY
THE COLD WAR ERA
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A natural disaster impeded offshore drilling for oil.
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Congress imposed new regulations on foreign energy companies.
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Conflicts in Middle East disrupted the distribution of oil.
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Congress introduced new legislation to increase the fuel efficiency of vehicles.
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Detailed explanation-1: -Persistent conflict between the two countries in the Middle East, a vital oil-producing region, may disrupt smooth flow of global oil supplies and thus destabilize global oil prices.
Detailed explanation-2: -In 1973-74 the real price of crude oil more than tripled. ‘ After declining slightly in 1975-78, it doubled again in 1979-80. But the 1979-80 price increase was eroded between 1981 and 1985, as price declined by nearly 40 percent. Price then collapsed in the first half of 1986, falling by more than 50 percent.
Detailed explanation-3: -The crisis led to stagnant economic growth in many countries as oil prices surged. Although there were genuine concerns with supply, part of the run-up in prices resulted from the perception of a crisis. The combination of stagnant growth and price inflation during this era led to the coinage of the term stagflation.
Detailed explanation-4: -During the 1973 Arab-Israeli War, Arab members of the Organization of Petroleum Exporting Countries (OPEC) imposed an embargo against the United States in retaliation for the U.S. decision to re-supply the Israeli military and to gain leverage in the post-war peace negotiations.
Detailed explanation-5: -The Arab oil embargo was the first oil crisis, an oil-supply disruption leading to major price increases and a worldwide energy crisis. The embargo caused the United States and western European countries to reassess their dependence upon Middle Eastern oil.