In October, 1973, panic gripped the United States. The crude oil-rich Middle-Eastern countries had cut off exports of petroleum to Western nations as punishment for their involvement in recent Arab-Israeli conflicts. Although the oil embargo would not ordinarily have made a tremendous impact on the US, panicking investors and oil companies caused a gigantic surge in oil prices. The situation, caused more by fear and irrationality than any firm economic basis, turned out to be one of the most memorable of the 1970s. Those who can remember the so-called "Mideast oil crisis" also remember long lines at the gas pump due to petroleum shortages and high gasoline prices.

To understand the oil crisis that gripped the world during the 1970s, we need to know a little of the history of Middle Eastern history and politics.

After World War II, the Allied powers created a Zionist state known as Israel to serve as a homeland for the millions of disfranchised (property-less) Jews throughout the world. Israel was proclaimed an independent nation by its people on May 14, 1948. The land for the new country was carved out of the British-controlled territory known as "Palestine." Although the Jews agreed to the settlement, the local Arabs refused to acknowledge the Israeli state and launched frequent attacks along its borders throughout the year 1949. The attacks eventually escalated into a full-scale conflict known as the "Suez-Sinai War."

The British and the French joined in on the side of the Israelis, presumably to punish Egyptian president Gomar Nasser for claiming control of the Suez canal, a manmade waterway connecting the Mediterranean and Red Seas. Only by decisive action on the part of the United Nations was the conflict resolved. During the fighting, Israeli forces managed to capture the Sinai Peninsula and the Gaza strip, but relinquished the territories at the urgings of the United States and other United Nations members.