cars and oil · pdf filecars and oil by josh bayer . topics ... the green revolution: the...
TRANSCRIPT
TOPICS
Background
The Oil Crisis
The Fall of the American Automotive Industry
The Revival of the American Automotive Industry
BACKGROUND OF THE ERA
Starting in the 1950s, the American highway system was built up under the Eisenhower Administration Under the Federal Highway Act of 1956
Gas was plentiful and cheap People believed that gasoline and oil reserves would never run out
No need for economy cars or environmentally friendly cars
Led to development of the auto industry
BACKGROUND OF THE CARS
Before the 1970s, the American auto industry was dominated by muscle cars, built for speed Muscle cars were fuel hungry
Muscle cars were built cheaply and sold cheaply Popular with the buying market since they brought performance to the average man
American auto industry was centered in Detroit
The market dominated by “The Big Three” Chrysler
General Motors
Ford 1969 Dodge Charger
MIDDLE EAST CONFLICT
Before the growth of the Arab oil industry, most Middle Eastern countries exhibited poor socioeconomic conditions for citizens
Many nations were previously governed by imperial European countries, such as Great Britain and France After WWII, when imperial nations withdrew, Middle Eastern countries were left in a
political mess
Tensions high between Arab nations and Israel Previous Arab-Israeli War only a few years earlier in 1967
The oil industry brought growing wealth to Arab countries, and their economies and world political power started to grow
Led to the modernization and development of major cities, such as Dubai, Kuwait City, Tehran, and Riyadh
WHAT LED UP TO THE OIL CRISIS?
Arab-Israeli War (Yom Kippur War): Began on October 6, 1973
Arab armies advanced with new technology received from Russia
The US, allied with Israel, aided with arms, airlifts, and military equipment
Aftermath: Israel gained land, demonstrated its military power
US targeted by Arab governments for helping Israel
Anti-American feelings from populations of the losing nations
WHAT LED UP TO THE OIL CRISIS? (CONT.)
The US became more dependent on foreign oil American consumption rose while domestic oil production decreased
Cars at the time were fuel hungry, and therefore national consumption was high
Organization of Petroleum Exporting Countries (OPEC) increased oil prices Countries in the Organization of Arab Petroleum Exporting Countries (OAPEC), a
subset of OPEC members, were the main exporters of oil in the world
Used political and economical leverage to raise the price oil
Tried to assert their position in the world
Pushed for anti-Israel policies
Oil prices increased rapidly Symbol for the OAPEC
THE OIL EMBARGO OF 1973
Many nations in the OAPEC were part of the Yom Kippur War
Representatives from those countries agreed to stop trading oil with the US as “punishment”
Led to inflated oil prices
World economy shaken – World oil prices quadrupled
Changes more severe in the US Price for oil was 7x higher in 1973 than 1972
Ended in January of 1974
EFFECT ON US ECONOMY
Due to the dependence on oil in many industries, including the auto industry, and many areas of the US economy were affected
However, not all areas were negatively affected Oil producing states, such as Alaska and Texas, benefitted from their oil producing and
refining industries as the rest of the country depended on domestic oil production
This boom only lasted until 1980 when oil prices started to stabilize
US aluminum industry grew – As auto manufacturers were trying to make their models more fuel efficient, they started making their cars out of lightweight aluminum
This new need for aluminum boosted the aluminum industry to new profit levels
Patterns in Domestic vs. Imported Oil US oil production peaked in 1970, and started a slow decline after that. At the same time, as American industry grew, the need for oil grew, too. Therefore, to meet this demand, the US started relying on imported oil. Imports peaked around 1977, the same time as American roads were full of large, fuel consuming cars. This spike in imports fell around 1980, as Americans switched to driving fuel efficient import cars.
EFFECT ON THE US AUTO INDUSTRY
US automakers suffered greatly
Since American automakers were not focused on building fuel efficient cars, when the oil embargo happened and gas prices spiked, no one wanted to buy a large, fuel hungry car
Few people could afford to spend increasing amounts of money on gas
Led to a shift to import cars
The 1978 Lincoln Continental only Got 7 miles per gallon
POLITICAL RESTRICTIONS
In the late 1960s, President Nixon set many new regulations on cars sold in America Needed to have a smaller impact on the environment
Needed to have better safety features
Needed to pass new government safety tests
Auto manufacturers needed to research more safety features to be able to pass the many specific safety tests from the government
President Richard Nixon
SHIFT TO JAPANESE IMPORT CARS
Unlike most American cars, Japanese cars delivered reliability and good fuel economy at affordable prices
On average, Japanese cars were smaller than American models and therefore were more economical
Since Japan had no oil of its own, and relied on imports, the Japanese automakers were used to making fuel efficient cars, since on average the price of gas was higher there
Japanese companies started building production plants in the US to increase their profit margin
A “Japanese Big Three” grew: Toyota
Nissan (Datsun)
Honda Toyota Corolla
THE VOLUNTARY RESTRAINT ACT OF 1981
Limited the amount of Japanese cars that could be imported into the US in an attempt to revive American auto manufacturers
The US government believed that the American automakers could thrive on the opportunity, given that they had less competition US auto manufacturers responded with their versions of small Japanese cars, like the
Ford Pinto, Chevrolet Vega, and AMC Gremlin (Comic Book Guy’s car)
Japanese automakers’ profits dropped due to lower US sales
Datsun 510
JAPANESE RESPONSE
To save money, Japanese automakers started not only assembling their cars on US soil, but producing parts here as well
Many automakers known for making cheap, economical cars introduced their fuel saving technologies into newly created luxury brands Toyota started Lexus
Nissan (Datsun) started Infiniti
Honda started Acura
By selling the same amount of cars, but at a higher price due to increased luxury and technological advancements, Japanese auto manufacturers were able to increase their profit margin
TECHNOLOGY
Before the 1970s, the Big Three were unrivaled as the major auto manufacturers in the American market There was no competition to push American automakers into innovating
Research was low, as well as the amount of new technology coming out on cars
However, as Japanese imports infiltrated the American market, domestic automakers needed to unveil new technologies to be able to compete with the imports
TECHNOLOGY (CONT.)
Unlike American automakers, Japanese car companies responded better to competition Japanese auto companies innovated, and tried to make their cars better than their
competition
As the auto market fell, American companies tried everything to save a few dollars on the manufacturing of each vehicle Many safety features were faulty, yet were placed on cars despite their problems, or
were just left out entirely
American cars were made with cheap materials, and therefore rusted easily Led to low reliability
Companies advertised technologies that either weren’t present or did not work correctly Lawsuits followed, and companies suffered one legal problem after another
AMERICAN INVESTMENTS IN JAPAN
Wanting to take part in Japanese success, the Big Three invested and bought smaller Japanese companies Chrysler: Mitsubishi Motors
Ford: Mazda
General Motors: Isuzu and Suzuki, partnered with Toyota and produced cars under the name Nummi
Profits started growing for the Big Three as they expanded their reach beyond the American market
Mitsubishi Galant
AMERICAN INVESTMENTS IN EUROPE
By investing in European brands, the Big Three were able to increase profits even more Chrysler: Lamborghini, showed interest in Maserati
General Motors: Started the Saturn brand to take cheap European cars and make them more luxurious for a higher profit margin
Ford: Jaguar and Aston Martin
The Big Three also grew in presence in European markets – Led to higher sales
1986 Aston Martin V8 Vantage
NEW AMERICAN CAR STYLES
In the years after the recession, American automakers were able to innovate and grow their company through advances in technology and marketing
Minivans became popular in the 1980s as Chrysler was looking for a way to expand their lineup Ended up with the Dodge Caravan and the Plymouth Voyager
SUV Boom: The Sport Utility Vehicle (SUV), which had previously been unpopular in the 1970s due to low fuel economy, started to become popular in the 1980s Allowed for cheap production costs for the manufacturers, and had a huge profit margin of
around $7,000 - 10,000 per vehicle sold
“K-Car”: Started by Chrysler to expand their lineup, but use the same cheap, easy to develop, chassis Were fuel efficient, could carry many people for its size, and were affordable Were an instant hit in the American market
LEGACY
Redistribution of wealth to oil producing nations Gave them outsized geopolitical power
Left simmering Arab-American political tensions
Drove Americans to buy smaller, more fuel efficient cars First, those manufactured by the Japanese, which enabled Japan to thrive for many
years
Then, those manufactured by US companies, which helped drive Japan into its current economic depression
American automakers dominate many of the world’s markets and continue the trend of researching and developing new technologies to be able to compete with auto manufacturers in other countries
LEGACY (CONT.)
Drove innovation in US manufacturing US auto manufacturers brought out new technology:
Disc Brakes
Fuel Injection
Electronic Engine Control Units
Electronic Ignition
Front Wheel Drive
Unibody Frame
New car styles SUV
K-Car
Minivan
KEY QUESTIONS
What led up to the oil crisis?
How did the oil crisis affect the US and world economy, specifically the auto industry?
Why was the US greatly affected by the rise in oil prices?
Why did import cars become popular in America?
What steps led to the revival of the auto industry?
BIBLIOGRAPHY
"Automobile Industry in the 1970s." American Decades. 2001.Encyclopedia.com. 16 May. 2013 http://www.encyclopedia.com.
Sale, Kirkpatrick, and Eric Foner. The Green Revolution: The American Environmental Movement, 1962-1992. New York: Hill and Wang, 1993. Print.
"How The U.S. Automobile Industry Has Changed." How The U.S. Automobile Industry Has Changed. N.p., n.d. Web. 17 May 2013.
"Energy Crisis (1970s)." History.com. A&E Television Networks, n.d. Web. 17 May 2013.
http://en.wikipedia.org/wiki/File:US_Crude_Oil_Production_and_Imports.svg
"Automotive Industry in the United States." Wikipedia. Wikimedia Foundation, 19 May 2013. Web. 20 May 2013.
"Japan..History of Imported Automobile." Japan..History of Imported Automobile. N.p., n.d. Web. 20 May 2013.
"Oil Crisis Effects Automobile Design." Examiner.com. N.p., n.d. Web. 20 May 2013.
"70's." 70's. N.p., n.d. Web. 20 May 2013.
"OAPEC HOME PAGE." OAPEC HOME PAGE. N.p., n.d. Web. 20 May 2013.
"The Middle East and Oil: Economic Modernisation and Political Stagnation."EInternational Relations RSS. N.p., n.d. Web. 20 May 2013.
"The Middle East and North Africa in a Changing Oil Market by Bright E. Okogu." The Middle East and North Africa in a Changing Oil Market by Bright E. Okogu. N.p., n.d. Web. 20 May 2013.
"Congress Approves Federal Highway Act." History.com. A&E Television Networks, n.d. Web. 21 May 2013.
"Arab Israeli War of 1967." History.state.gov. US Department of State, n.d. Web.
"Yom Kippur War." History.com. A&E Television Networks, n.d. Web. 21 May 2013.
IMAGE CREDITS
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