Gas Prices. By: David Radich. APUSH period 4. Statement. Gas prices are rising due to inflation, high demand rates in the United States, and currently because the Obama administration is putting restrictions on drilling. First Cause of Gas P rice I ncrease.
By: David Radich
APUSH period 4
Gas prices are rising due to inflation, high demand rates in the United States, and currently because the Obama administration is putting restrictions on drilling.
Oil is purchased and sold with dollars in the market. So when there is inflation, there are more dollars needed to buy oil. Part of the inflation in the united states is because there is to much money being circulated. There is to much being printed. This means that more dollars are needed at the gas pump to purchase oil.
Technically, the United States is not low on supply.
We have much more oil available to us than what OPEC has. It is just a matter of drilling for it.
We are being restricted on drilling for oil on the offshore. This is what is causing the price of a barrel to be much more than what it should be if we actually drilled for oil.
Connection with Nixon’s presidency
Nixon’s change in the gold standard by ending it and then fixing the value of the dollar. This is connected with how nowadays the dollar is used with trading oil, and it has a big impact on why the prices of gas is raising. Nixon lowers the value of the dollar which is what is occurring now where the value of the dollar is dropping. It just ended up in hurting the economy. Look what is happening today, our economy is not doing so well.
A war was occurring during the time between Israel and Egypt and Syria. Middle Eastern Arab states stopped exporting oil to the United States and increased the cost of oil exported to western Israel to get the support of them. The speed limit was lowered and energy was conserved. The rising oil prices benefited OPEC and hurt the United States. At the time known as stagflation was a period of stagnant economic growth and inflation.
“The immediate results of the Oil Crisis were dramatic. Prices of gasoline quadrupled, rising from just 25 cents to over a dollar in just a few months. The American Automobile Association recorded that up to twenty percent of the country’s gas stations had no fuel one week during the crisis. In some places drivers were forced to wait in line for two to three hours to get gas (Frum, p.320). The total consumption of oil in the U.S. dropped twenty percent. This was due to the effort of the public to conserve oil and money. There was an instant drop in the number of homes created with gas heat, because other forms of energy were more affordable at this time (Arab Oil Embargo of 1073-74).” (Sarah Horton)
In my opinion, I feel that by stopping the drilling to the offshore where we can get a lot of oil is a bad idea. Obama says he wants to use other energy to help out the economy because oil is a cause of global warming (Well global warming hasn’t been proven). Oil is needed in the United States for things to flow and work. The United States highly depends on it and it would help the economy money wise as well. Gas would go down and more money would be spent on oil because the prices go down thus making the regulation of money much better. So I feel that banning offshore drilling is a bad idea.
What did Nixon do in thinking that he would be able to “promote exports by making American good cheaper overseas” which ended up hurting the economy?
While Nixon is president he decides to lower the value of the dollar. He thinks this will help export more goods, make more money, and help the economy. However this hurts the United States economy because the US hits a period of stagflation where there is inflation in the dollar and also stagnant growth in the economy.
Rising Oil prices hurt the United States economy because it was a factor that contributed to stagflation. The misery index at the time was at 10.8 which is not good. There was high unemployment and high inflation rates. As the prices on gas rose more people went from cars that used up a lot of gas to smaller cars that didn’t use up as much gas. Oil in itself hurt the economy because there was not much being exported to the United States, and there was a high demand for oil because of the cars and factories.
Primary Sources That help Give Insight
The picture to the left is a photo of the time period when the oil crisis was occurring. This picture helps develop a sense of what it looked like in the past and how gas was being treated at the time. This gives me a better visual as to how gas was being limited to people in the United States.
My dad also acts as a primary source. He lived during the time and he was able to tell me what is was like during the time of the oil crisis in 1973. I got a better understanding of the problems the economy was facing and the ideas that the Middle Eastern Arab countries had in mind in banning the export of oil to the United States. It made it much more easier to relate to what is happening nowadays with gas prices rising.