OIL CRISIS OF 1973 HAD BIG IMPACT ON SMALL CARS
The 1973 OPEC oil embargo brought smaller cars to the forefront of the market
In the 1950s and ’60s, it seemed as if America couldn’t build its cars big enough. They had been steadily growing longer, lower and wider since the end of the 1940s, with engines that grew proportionately as well.
In 1950, for example, Cadillac’s engine displaced 5.4 litres. By 1969, you could get one that was 8.1 L and drank an estimated 24 L of fuel for every 100 kilometres driven.
Even mainstream models were generally big and thirsty. Many drivers were getting tired of filling these enormous land yachts, but the market was slow to respond. The domestic manufacturers had produced some downsized models, but only a few, and Japanese automakers were just putting a foot in the door with their tiny cars. And then, essentially on one day in 1973, everything changed when America’s oil supplier turned off the tap.
The U.S. had become increasingly dependent on foreign oil. Much of it came from members of OPEC, the Organization of the Petroleum Exporting Countries, founded in 1960 by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. It was sympathetic to Egypt and Syria, which had lost land to Israel during the Six-Day War of 1967. On October 6, 1973, in a conflict known as the Yom Kippur War, military forces from those two countries attacked Israel in an attempt to win it back.
Within days, the Soviet Union began providing equipment to the Arab forces. U.S. president Richard Nixon responded by pledging emergency aid for Israel.
In retaliation, OPEC completely cut off supplies to any country that supported Israel. It also slashed production, eventually causing worldwide oil prices to quadruple.
The United States used about 17 million barrels of oil each day, but only produced some 11 million of that itself.
Canada made up some of the difference, but most came from Venezuela, which participated in the OPEC boycott. Nixon had urged Congress to increase tax credits and loosen regulations to help increase domestic oil production, but nothing could be done to immediately make up the difference.
Although motorists found the price jump bad enough, it got even worse when many stations simply couldn’t get enough fuel to sell. Long lines and short tempers became the norm.
Some states implemented an “odd-even” system tied to vehicle licence plates. If your plate ended in an odd number, you could only buy gas on an odd-number day, with even-number plates allowed on even-number days.
Here at home, Ottawa froze domestic crude prices below that of the world market in 1973, but the following year, allowed it to rise and match the inflated worldwide price. Canadian stations didn’t run out of gas, but drivers paid more for it.
Needless to say, when gas was hard to get, the last thing anybody wanted was a car that guzzled it.
The domestic “Big Four” of American Motors, Chrysler, Ford and General Motors couldn’t ramp up production of their smaller models quickly enough, and the big cars they made sat on dealer lots.
The oil embargo ended five months later, on March 18, 1974, but the resulting recession and the shock waves continued.
Chevrolet, the top-selling U.S. brand during the embargo, built more than 2.5 million vehicles in 1973. By 1975, production had crashed to just over 823,000 units.
Ford fell equally hard, its factories turning out 780,000 fewer cars in 1975 than it had in 1973.
The import brands suddenly looked pretty good, since their cars were even smaller than the “downsized” models offered by the domestics.
In 1973, Honda sold 38,857 Civics in the United States. Two years later, it sold 102,389.
Still, with the embargo over and oil prices stabilizing, Americans were quick to go back to their old ways.
Import sales continued to rise steadily, but so did domestic ones, and while Toyota sold almost 347,000 vehicles in 1976, Chevrolet was back up to 2.1 million.
Despite such measures as a federal highway speed limit of 55 miles per hour, and new automobile fuel consumption standards, American oil consumption and the number of imported vehicles continued to grow.
But oil prices weren’t done their roller-coaster ride. A revolution in Iran that began in 1978 led to a decline in oil production and prices that more than doubled by 1980. The U.S. went back into a recession. Chevrolet and Ford, the country’s top-selling brands, dropped by a combined 820,000 units from 1980 to 1981. Most import sales fell as well, but by much smaller percentages.
The Japanese had also done their homework after the last oil issue. Americans might have originally bought them out of necessity, but they were less than impressed with the cramped cabins, gutless engines, and cheap construction. Larger models, such as the Honda Accord and Toyota Cressida were introduced, and quality became a priority.
In 1982, when Ford produced just over 783,000 vehicles, Toyota sold almost 556,000. Starting from one day of political revenge, the American auto scene was irrevocably changed.