How the Oil Crisis Changed Cars Forever

The US went from V8s in every driveway in the 1970s to four-cylinders in every crossover today. We have the 1973 Oil Crisis to thank/blame.  

Era Defining 

This article is titled “How the Oil Crisis Changed Cars Forever” but it could have easily been titled “How Nixon and OPEC killed the Muscle Car” or “How America Learned to Stop Worrying and Love the Compact Car.” This year is the fiftieth anniversary of the 1973 Oil Crisis and reflecting back over the decades, it’s difficult to find a more transformative event for the American car industry. History is complicated and contingent, but the Oil Crises of 1973 and 1979 have had a clear and outsized impact on today’s automotive landscape.

The Early 1970s and the Clean Air Act 

Richard Nixon signs Clean Air Act of 1970
Richard Nixon signs Clean Air Act of 1970

The period of the late 1960s and early 1970s was the heyday of the muscle car and the unrepentant V8. The “no replacement for displacement” ethos saw horsepower rating and engine sizes rise while fuel economy numbers dipped. Fuel was cheap and had been for decades and there was little incentive for carmakers to seek greater efficiency when consumers were snapping up the thirsty V8s in muscle cars and land-yachts like the Cadillac Eldorado. Indeed, the massive Eldorado’s top engine option was a gargantuan 8.2L V8 netting an abysmal nine mpg.

If you’re familiar with muscle car engines of the early 1970s, you’ll know that things were already changing. And for that we can thank smog. Increasing post-war urbanization and the proliferation of the car had resulted in major smog problems in US cities. In 1970, the Nixon Administration responded with a major update to the Clean Air Act, passed on “Earth Day,” that set new, increasingly strict limits on emissions of carbon dioxide, nitrogen oxide (NOx), and carbon monoxide. In response, carmakers began a series of changes aiming to hit somewhere close to those targets including installing less rich running carburetors, reducing compressions ratios, and retarding ignition to reduce NOx emissions.

The result was a trend downward in muscle car horsepower from the lofty peaks we saw in the 1971 model year (that and a reduction in emissions over the course of years that greatly improved urban air quality). American carmakers were far from done with humungous V8s, a love affair that even an oil crisis and an economic recession couldn’t sunder.

The ’73 Oil Crisis 

Closed Pumps
Closed Pumps

The infamous Oil Crisis of 1973 was sparked by events in the Middle East when Egypt and Syria invaded Israel to set off the conflict that became known as the Yom Kippur War. The US was chief among a host of nations that pledged support for Israel, including military aid.

OPEC, the Organization of Petroleum Exporting Countries, included many allies of Egypt and Syria like Saudia Arabia, Iraq, and Kuwait, along with the US’s principal oil importer Venezuela. In response to US support for Israel, OPEC quickly instituted an embargo on oil exports to the US, Canada, the UK, the Netherlands, and other allied countries.

The US had been steadily increasing domestic oil production over the post-war decades. Pres. Eisenhower had instituted a domestic quota policy to encourage US drilling which had remained in place through the 1960s. Demand for oil in the US had climbed and climbed during those years, jumping a full 52 percent in just the three years from 1969 to 1972. Meanwhile, US domestic oil production peaked in 1970. Of the 17 million barrels a day the US was consuming at the time 6 million were imported.

Speed Limit Sign
Speed Limit Sign

And because of that large chunk of US oil consumption being imports, OPEC’s embargo hit the US economy and US consumers hard. Prices on a barrel of oil quickly doubled and eventually quadrupled. The US economy, already on a precarious footing, worsened and tipped into recession. It wasn’t just the price of gas that hit consumers hard, indeed, often there was no gas to buy at all. Lines formed blocks long in many places as motorists waited hours for a chance to fill up. Tensions ran high as US reserves dwindled.

During this time, the Nixon Administration instituted a national interstate speed limit of 55 mph with the hopes of reducing the amount of gas the nation used. Though it had minor impact on overall gas consumption, it did significantly reduce highway traffic fatalities.

Eventually, a negotiated settlement was within sight, thanks largely to the pressure the US was forced to bring to bear on the situation. With that, OPEC lifted its embargo in March of 1974. The Oil Crisis hadn’t lasted long, but its ripples would be felt for years to come.

Big V8s, Fewer Horses, and the Rise of the Compacts 

1975 Oldsmobile Eighty-Eight -
1975 Oldsmobile Eighty-Eight -

The 1973 Oil Crisis marked the beginning of what automotive historian have dubbed the Malaise Era, the name deriving from Pres. Carter’s accurate but politically disastrous diagnosis of the American attitudes in the mid- to late-1970s. The Malaise Era in American auto manufacturing was typified by large, often in-efficient, occasionally ugly (don’t @ me bro) cars.

The resolution of the Oil Crisis saw gas prices come back down to earth, buying time for carmakers to…continue to build huge V8s. In the name of greater efficiency, the V8s of the 1970s made big sacrifices in horsepower. Displacement to output numbers from the middle of the decade are sometimes comical. For instance, in 1975 GM’s 455 Rocket V8 (that’s 7.5L) was rated to 215 horsepower in the Oldsmobile 88.

1971 Ford Pinto
1971 Ford Pinto

Sure, US carmakers made some attempts at smaller, more efficient cars. New American subcompacts include the Ford Pinto, the AMC Gremlin, and the Plymouth Arrow. Japanese automakers were also making in-roads in the US with their subcompacts like the Honda Civic, Toyota Corolla, and Datsun B210. All these cars offered huge improvements in gas mileage, often averaging at or above 40 mpg.

The difference between the US subcompacts and the Japanese ones, however, was quality. The Japanese cars offered greater reliability at a time when US carmakers’ quality control appeared at its nadir. The contrast was enough for the likes of Toyota and Honda to gain a foothold in the US market that proved instrumental in their eventual rise to automotive titans.

Welcome to (the) CAFE 

1978 Plymouth Fury -
1978 Plymouth Fury -

It wasn’t just consumer sentiments pushing carmakers toward building smaller, more efficient cars. First proposed in 1975 and finally implemented in 1978, the CAFÉ, or Corporate Average Fuel Economy, laid out new requirements for fuel efficiency with the ambitious target of a 27.5-mpg average for new cars by 1985.

In fact, fuel economy numbers had been trending downward since good record keeping began just after WWII, reaching their lowest point in, you guessed it, 1973. The average for light-duty vehicles that year was 13.4 mpg and the fleet wide average that included heavy-duty vehicles dipped below 12 mpg for the first and only time to 11.9 mpg.

In anticipation of the coming CAFE standards, US automakers in the 1970s began working toward greater fleet-wide efficiency, hence the subcompacts like the Pinto. And yet, by 1977 the average fuel economy of a new car in the US was just 14 mpg. That’s because, as noted above, for every Civic getting 40 mpg city, there was a Plymouth Fury with six V8 options including a gigantic 440 that yielded 11 mpg combined.

The ’79 Oil Crisis and Aftermath 

Line at gas station
Line at gas station

If US automakers continued to drag their heels, history was there to offer yet another reminder. The 1979 Iranian Revolution sent another major shockwave through global oil markets. Though not as prolonged or as deep as the crisis in 1973, the 1979 Oil Crisis too resulted in higher prices, shortages, and gas lines. In 1980 the price of a barrel of oil had risen to a high of $35 (or $124 in today’s dollars). Prices steadily declined from those highs through the 1980s, but it was finally clear to American car buyers that gas guzzling V8s did not, in fact, belong in every engine bay. Manufacturers traded out V8s in favor of V6s and engine technology improved to provide marginally better fuel economy.

Despite the CAFE standards in place, fuel economy numbers did not shift as quickly as those ambitious targets, with many automakers choosing to just pay the fines. By 1991, the average fuel economy for light-duty vehicles had reached 21 mpg (16.9 mpg overall). By 2010, it was 23.5 mpg and in 2020 25.7 mpg. Over those fifty years since the 1973 Oil Crisis, fuel economy crept upward.

Increasingly stringent regulations around fuel economy have been a main driver pushing automakers in the direction of greater efficiency. It took two successive oil crises and decades of fits and starts to go from an average of 13 mpg in 1973 to over 25 mpg today. Which shows either how far we’ve come or how far we have yet to go. Unlike in the early 1970s, there are today loads of options for saving on fuel costs, from hyper-efficient gas engines, to hybrids, to full EVs. And with that in mind, can we interest you in the new 2023 Toyota Prius? It gets 57 mpg city.

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Chris Kaiser

With two decades of writing experience and five years of creating advertising materials for car dealerships across the U.S., Chris Kaiser explores and documents the car world’s latest innovations, unique subcultures, and era-defining classics. Armed with a Master's Degree in English from the University of South Dakota, Chris left an academic career to return to writing full-time. He is passionate about covering all aspects of the continuing evolution of personal transportation, but he specializes in automotive history, industry news, and car buying advice.

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