The oil embargo
In October 1973, the United States supported Israel after a surprise attack by Egypt and Syria in the Yom Kippur War. Led by Saudi Arabia, the Organization of the Petroleum Exporting Countries (OPEC) took revenge against the United States: they announced an oil shipping embargo against the United States and Israel's European allies.
The price of oil immediately rose to $11.65 per barrel, an increase of 387%. Lines miles-long formed at gas stations. Americans quickly discovered just how much of their daily life depended on cheap oil. Even after the embargo ended in March 1974, oil prices remained about 33% higher than they had been before the crisis.
The end of the postwar economic boom
Stagflation and the oil embargo both indicated that the American postwar economic boom was over. Vietnam and the Middle East had revealed the limits of US power abroad.
The complex forces which led to the downturn of the 1970s continue to shape the American economy, particularly globalization (international interdependence of business and culture). Information technology has made communication and coordination easier, and many companies have moved manufacturing jobs out of the United States in order to save on labor costs. Today, 80% of all American jobs are in the service industry. The United States also has worked to reduce its dependence on foreign oil by reducing energy usage, improving vehicle fuel-efficiency, investing in renewable energy, and increasing domestic oil production.
Source: Stagflation and the Oil Crisis
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