The Importance of Arab Oil in the American Economy The American economy is very dependent on oil and the

United States is one of the most important importers of oil in the world. The key role that that United States play in the oil industry, as the largest importer of oil, is reflected in the fact that oil is always priced in US dollars. The population of the United States account for about 5 percent of the population of the world, but it consumes about 25 percent of the oil that is used in the world every year. The daily rate of oil consumption per person in the United States is about double the rate of consumption in the European Union. The US is the largest consumer of oil in the world, and it is also the world's largest importer of oil. The United States import about two thirds of the oil that it uses.1 The American economy needs oil for energy production and for fuel. Oil is the most important source of power in the US, where alternative sources of energy have not been developed extensively. About 40 percent of the energy that is used in the United States every year comes from oil. American society is based around the car, so the US requires a lot of oil for fuel as well as for energy production. Oil provides about 97 percent of the fuel used by American vehicles, including ships, trains, planes and automobiles. Oil is also a source of important chemicals for a number of industries, such as the plastics and textile industries. Much of the oil, which is brought into the US comes from the Arab World, particularly Saudi Arabia, although the United States imports oil from a number of different countries in the Arab World, including Pakistan, Iraq and Syria. About 13 percent of the oil that is imported into the United States come from Saudi Arabia. The United States does import oil from countries that are not part of the Arab world, but which means that it is not entirely dependent on Arab oil. However, the US economy needs Arab oil if it is to continue functioning as it does now. The importance of Arab oil to the United States was demonstrated by the events of the 1973 crisis, when the Arab world raised its oil prices, cut oil production and put an embargo in place preventing the sale of oil to the US. This resulted in significant economic impacts in the United States as the power shifted away from industrial countries and towards the oil producing countries. The cost of oil in the United States rose dramatically in response to the price increases and to the embargo on Arab oil. The state of Oregon actually banned the use of Christmas lights and commercial lighting in order to reduce unnecessary energy consumption. In response to calls from the government, approximately 90 percent of gas stations stopped selling gasoline on Sundays and Saturday evenings. However, by the end of February 1974, about 20 percent of gas stations in the US had completely run out of fuel. Changes in the price of the oil produced by Arab countries can create serious economic difficulties for the United States. The effects of the 1973 oil crisis were long lasting and significant, and they affected
1

Robert Vitalis, Americas Kingdom: Mythmaking on the Saudi Oil Frontier, Stanford University

Press, 2006.

everyone in the United States, causing public unrest in some cases, when truck drivers reacted badly to oil rationing. Similar effects occurred in the US when oil prices rose between 2005 and 2008.2

Rachel Bronson, Thicker than Oil: Americas Uneasy Partnership with Saudi Arabia, Oxford

University Press, 2006.