Give me an explanation of how the oil OPEC embargo impacted the U. S. Free Enterprise System in the 1970s

Question

History

Patience Arnold

17 January, 08:36

Give me an explanation of how the oil OPEC embargo impacted the U. S. Free Enterprise System in the 1970s

+1

Answers (1)

Know the Answer?

Abigayle Lester · Answer 1

OPEC oil embargo in 1973 was enacted to limit the oil supply from OPEC members to the countries that they perceived as the supporter of Israel during the Yom Kippur war. United States was one of the target.

As a result, the demand of oil in United States outnumbered the amount of supply. This caused the price of oil to massively increase. The price of oil per barrel was quadruple from $3 to $12 per barrel.

This caused a massive problem within the U. S. Free Enterprise System. There were a lot of industries that relied on oil in order to conduct their operation. For example, Air lines, train, Taxi, manufacture companies that use machine powered by oil, Food industry, etc.

Increase in oil price resulted in an increase in their operating cost. This force them to increase the price of their products. Since not many customers willing to pay for the new price, a lot of them were forced into bankruptcy.