Graph of Top Oil Producing Counties, showing drop in Iran's Production ^[1]

In 1980, following the Iraqi invasion of Iran, oil production in Iran nearly stopped, and Iraq's oil production was severely cut as well.

After 1980, oil prices began a six-year decline that culminated with a 46 percent price drop in 1986. This was due to reduced demand and over-production, and caused OPEC to lose its unity. Oil exporters such as Mexico, Nigeria, and Venezuela expanded. The US and Europe got more oil from Prudhoe Bay and the North Sea.

Iran

In November 1978, a strike by 37,000 workers at Iran's nationalized oil refineries initially reduced production from per day to about . ^[3] Foreign workers (including skilled oil workers) fled the country. On January 16, 1979, Shah of Iran, Mohammad Reza Pahlavi and his wife left Iran at the behest of Prime Minister Shapour Bakhtiar (a long time opposition leader himself), who sought to calm down the situation.^[4]

Effect on Other OPEC members

OPEC net oil export revenues for 1971 - 2007. ^[5]

Effect on the United States

Line at a gas station in Maryland, USA, June 15, 1979.

As the average vehicle of the time consumed between 2-3 liters (about 0.5-0.8 gallons) of gasoline (petrol) an hour while idling, it was estimated that Americans wasted up to of oil per day idling their engines in the lines at gas stations.^[7]

Gas coupon printed but not issued during the 1979 energy crisis

In July 1979, President Jimmy Carter outlined his plans to reduce oil imports and improve energy efficiency in his "Crisis of Confidence" speech.^[9] During the speech, Carter wore a cardigan and encouraged citizens to do what they could to reduce their use of energy. He also installed solar power panels on the roof of the White House and a wood-burning stove in the living quarters. However, the panels were removed in August 1986 during the administration of his successor, Ronald Reagan, after a leak and were never replaced.

Carter's fire-side speech argued the oil crisis was "the moral equivalent of war". Several months later, in January 1980, Carter issued the Carter Doctrine, which declared that any interference with U.S. oil interests in the Persian Gulf would be considered an attack on the vital interests of the United States.^[10]Additionally, as part of his administration's efforts at deregulation, proposed removing price controls that had been imposed in the administration of Richard Nixon during the 1973 crisis. Carter agreed to remove price controls in phases; they were finally dismantled in 1981 under Reagan. ^[11]

In 1980, the U.S. Government established the Synthetic Fuels Corporation to produce an alternative to imported fossil fuels.

Oil Patch

When West Texas intermediate crude oil increased 250 percent between 1978 and 1980, the oil-producing areas of Texas, Oklahoma, Louisiana, Colorado, Wyoming, and Alaska began experiencing an economic boom and population inflows.^[12]

Automobile fuel economy

At the same time, Detroit's then-Big Three automakers (Ford, Chrysler, GM) were marketing downsized automobiles which met the CAFE fuel economy mandates passed in 1978; by the mid-1980s, a majority of rear wheel drive (RWD) family sedans and station wagons sold poorly despite government mandates from CAFE; vehicles like the Ford Fairmont and Dodge St. Regis were short-lived in response to second energy crisis.

GM's Cadillac division experimented with their V8-6-4 power plant (the ancestor of the modern-day Active Fuel Management and/or variable displacement), which was a market failure.^[13]

When RWD family sedans were marketed during this era, this is where Japanese imports were building inroads; by the start of the 1980s, every automaker was making the transition to front-wheel drive.

See also

• Energy crisis
• Iran hostage crisis
• 1973 oil crisis
• 1979 world oil market chronology
• 1980s oil glut
• 1990 spike in the price of oil
• Oil price increases since 2003
• Hubbert peak theory
• Jimmy Carter

Further reading

• The Prize: The Epic Quest for Oil, Money, and Power,(1993) , by Daniel Yergin]], Simon & Schuster, ISBN 0671799320 & ISBN 0671502484

References

fr:Deuxième choc pétrolier it:Crisi energetica (1979) nl:Oliecrisis van 1979 sv:Oljekrisen 1979 zh:???????