506 ChaPter^10
home he had to deal with a newfound emphasis on the environment, brought
on in large measure by a global crisis in petroleum production and control,
one that would also have a deep impact on the U.S. economy. Activists con-
cerned with the environment had been developing a political movement
already by the time Nixon became president, and even sponsored the first
“Earth Day” in April 1970 to raise awareness of pollution, ecology, and the
damage being done to the natural world. But the subsequent oil crisis really
brought the issue into sharp focus. Oil consumption in the U.S. was growing
throughout the 1960s and 1970s, and much of the increase was due to a rise
in foreign oil–while in 1970 about 22 percent of oil consumed was foreign-
produced, by 1973 it was up to 36 percent. With Watergate intensifying, how-
ever, Nixon could not really address the oil issue, and in 1973 it blew up.
During a war between the Arab states and Israel [The Yom Kippur or
Ramadan War], the Arab members of OPEC, or the Organization of Petroleum
Exporting Countries, decided to stop, or embargo, oil shipments to the U.S.
because it had given so much military support to Israel. Consequently, imports
dropped from about 6 million barrels a month to about 5 million, a 17 percent
decrease; the price of oil, which had been $3 a barrel [almost $16 in today’s
money] quadrupled to $12 a barrel [nearly $64 today]; a gallon of gas went
up from 38 cents to 55 cents between May 1973 and June 1974 and gas
rationing went into effect; and the New York Stock Exchange lost nearly $100
billion in value in six weeks after the embargo was put into effect. The Arab
states, considered “Third World” just years earlier, were now asserting their
strength, the power of their oil, at American expense.
While seriously damaging the U.S. economy, the energy crisis was not the
only troubling issue Nixon faced. In 1971, inflation had become a serious
problem and in August the president put into effect a wage and price freeze,
a government order to keep prices and wages at their current levels [consid-
ered a liberal, if not “radical,” policy]. More importantly, in August 1971 he
issued the “Nixon Shock” by taking the U.S. off the gold standard and there-
by ending the Bretton Woods System [see Chapter 6]. As noted, at Bretton
Woods in 1944, the U.S. dollar had been pegged to the price of gold and any
associated country could convert their currency to dollars or gold at fixed
rates. Nixon’s order would allow the dollar to “float,” to be valued against
other currencies rather than against the fixed price of gold. Other countries