Part 5, Chapter 30 Summary

Kissinger knew nothing about oil and little about international economics before 1973. The "Arab oil embargo" consisted of two elements: 1) the rolling 5% production restraints and 2) the total ban on the export of oil to the U.S. and the Netherlands. With no spare production capacity, the U.S. lacked influence on the world oil market. Iran and Iraq defiantly increased output, while Saudi Arabia discovered that soaring prices translated into a net increase in income. Fear and uncertainty gripped oil companies and consumers alike. Schumacher's Small is Beautiful, which challenged the tenets of unbridled growth in the 1950s-60s, became the talk of the day. The psyches of Western Europe and Japan were transported back to the bitter postwar years of deprivation and shortage. Many Americans did not know that the U.S. had imported oil prior to October 1973, and could not...