Good evening. We’re heading into the second full week of war in Iran, and oil prices have been going up and down. Are things feeling a bit familiar? Let’s go to the history books.
My colleague Mitchell Hartman takes a look back at the 1973 oil crisis and explains some important context. It’s a good refresher for those of you who remember, and a great primer for young adults like myself. —
Catie McCarthy, digital producer |
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A photo dated Jan. 7, 1974, of one of the pumping stations at the petroleum port in Al Ahmadi, Kuwait. Scanpix Sweden/AFP via Getty Images | Is the U.S. headed for a repeat of the 1973 oil crisis? |
It’s still early in the current war in the Middle East, but the impact on oil markets may feel familiar. |
The current situation in the Middle East — a major war involving the U.S., Israel, and Israel’s enemies, spiking global oil prices, spiking domestic gasoline prices — may feel a bit like déjà vu. All this happened back in 1973, during the Yom Kippur War. And again in 1979, after the Iranian Revolution. More than 50 years later, is the situation really analogous? Can lessons be learned?
Let’s roll the clock back to 1973. Richard Nixon is president. The U.S. is far-and-away the biggest economy in the world.
And, said Princeton University historian Julian Zelizer, “This is a culture after World War II built around automobiles, around highways, around driving, new suburban homes which required a lot of heating.” The heating takes a lot of oil, most of it pumped and shipped from the Middle East. Which suddenly becomes a very big problem when OPEC declares an oil embargo on the U.S. and other allies of Israel.
“This triggers the first round of an oil crisis where Americans face long gas lines and high prices,” Zelizer said.
“You can only buy gas certain days, people are siphoning off gas from people’s cars. There’s just this air of desperation,” he said. There’s also resolve to make the U.S. economy less vulnerable, by reducing our dependence on foreign oil. The government encourages more fuel efficiency and more oil exploration.
Fast forward to now. |
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Let’s do the numbers Stocks made up big early losses spurred by this morning’s high oil prices. The change in perspective came after President Donald Trump claimed that “the war is
very complete,
pretty much.” The S&P 500 gained 0.8%, the Dow added 0.5%, and the Nasdaq rose 1.4%. Oil prices similarly swung today, as markets reacted to changing sentiments about the war in Iran. Crude oil opened over $119 per barrel, before settling below $100.
Your money
A new survey from the Federal Reserve Bank of New York reports consumers weren’t feeling too great about the economy last month, before war began. Your feelings can have real-world economic consequences. The ensuing war isn’t just driving up the price of crude oil. Agricultural commodities like palm oil and wheat
are becoming more expensive, and that could impact your grocery bill in a few months. Take note, concert fans: There’s a tentative settlement in the monopoly lawsuit against Live Nation and Ticketmaster, and you can read the terms here. Twenty-six states and D.C. are still going through with the lawsuit, though, so it’s not a done deal. Tech |
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QUOTE OF THE DAY | “We've got a lot of things that we are one shock away from catastrophe.” |
— Steve Luby, a physician, epidemiologist, and professor who helps lead the Stanford Existential Risks Initiative | |
Around the world, researchers are studying dangers, like nuclear weapons and climate change, that could threaten civilization itself. “Marketplace Morning Report” host David Brancaccio spoke to Luby as part of a new series exploring these risks and what we’re learning about them. |
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courtneyk/Getty Images | Final note |
“Cheers” today, gone tomorrow? |
It’s all a case of copyright. Customers purchase a license for the content, and unlike a physical copy, Amazon can claw back access if it loses the rights to host a movie or book. Maybe that’s why some people are embracing DVDs. | |
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