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Chapter 14: Problem 7

What did the United States do in the early 1970s to resolve the disparity between oil production and consumption? What events caused the sudden oil shortages of the mid-1970s and then the return to abundant, but more expensive, supplies?

Short Answer

Expert verified
To resolve the disparity between oil production and consumption in the early 1970s, the U.S. invested in energy-efficient technologies and explored other sources of oil. The sudden oil shortages of the mid-1970s were due to the OAPEC oil embargo and the Iranian Revolution while the return to abundant but more expensive supplies was a result of increased production from non-OPEC countries, high oil prices encouraging more exploration and drilling, and the adoption of energy-saving measures.

Step by step solution

01

Identifying the Efforts of U.S. in early 1970s

In the early 1970s, the United States was faced with a disparity between oil production and consumption. To resolve this issue, the U.S. mainly focussed on investing in new technologies and more efficient ways to consume energy. Furthermore, the U.S. started to explore various ways of getting oil from other countries or sources, which also involved non-conventional sources such as shale oil.
02

Recognizing the Events Causing Sudden Oil Shortages in mid-1970s

The sudden oil shortages in the mid-1970s can largely be attributed to the 1973 oil embargo by OAPEC (Organization of Arab Petroleum Exporting Countries), targeted at the U.S. and its allies for their support of Israel in the Yom Kippur War. Another important event was the 1979 Iranian Revolution, disrupting oil exports from Iran, a significant producer.
03

Understanding the Return to Abundant but More Expensive Supplies

The return to abundant, but more expensive, oil supplies in the late 1970s was due to a variety of factors. This included increased production from non-OPEC countries, elevated prices encouraging exploration and drilling, diversification of energy sources, and adoption of energy-saving technologies and measures. Notably, oil prices remained high due to geopolitical instability, the embedded cost of exploration, and a shift in market dynamics.

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