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Origins of the 1973 world oil shock World competition over resources The Arab-Israeli conflict triggered an energy crisis in the making Before the embargo the industrialized West especially the United States had taken cheap and plentiful petroleum for granted Indeed the form American cities took after World War II - with expansive suburbs full of detached single-family homes - depended on the automobile as the principal means of transportation - a form that consumes oil en masse as fuel Between 1945 and the late 1970s the West and Japan consumed more oil and minerals than had been used in all previous recorded history Oil consumption in the United States had more than doubled between 1950 and 1974 With only 6 percent of the worlds population the US was consuming 33 percent of the worlds energy At the same time Americas economy accounted for a quarter of total global production meaning US workers were over 5 times more productive than the global average because of their advanced industrial sector which accounts for the bulk of energy usage The fall of the dollar US economic policies had an important effect on the crisis While the OPEC boycott was an immediate trigger historians increasingly see the crisis as being rooted in American economic policies Oil especially from the Middle East was paid for in United States dollars at prices fixed in dollars US President Richard Nixon had inherited an economy in which growth was already sluggish in which inflation was already troubling By the summer of 1971 the president was under strong public pressure to act decisively to end the dilemma of rising prices and general economic stagnation see stagflation Nixon thus released the dollar from the fluctuating gold standard that had controlled its worth since the signing of the Bretton Woods pact at the end of World War II allowing its value to fall in world markets The United States suspended convertibility of the dollar on
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