The ongoing oil price increase was accelerated by the Organization of Petroleum Exporting Countries (OPEC) embargo, begun in October 1973, on shipping oil to the nations—the United States, its western European allies and Japan—that supported Israel in the Yom Kippur War. OPEC’s influence on increasing world oil prices was dramatic throughout the 1970s and the negative impact on the western economies prompted the first initiatives to decrease western dependency on Middle Eastern oil.

 

One such initiative at the federal level in the US involved increasing fuel efficiency by mandating Corporate Average Fuel Economy (CAFE) standards. After 1980, CAFE's 27.5 mile per gallon fuel consumption mandate prompted many changes in automobile design relating to vehicle size, fuel injection, transmission design and in many models, the phasing out of the traditional front engine/rear wheel drive layout for the more efficient front engine/front wheel drive.

 

Given the interconnections between the Canadian and US auto industries, US CAFE standards became the de facto standards in Canada.

 

In the early 1990s, the average fuel economy of new vehicles declined as North American consumers increasingly opted for larger trucks and sport utility vehicles. But gradually, pollution from gasoline-fuelled automobiles became matters of public concern. Then, the events of September 11, 2001 once again elevated energy sourcing to the top of the national agenda.

 

The US Energy Independence and Security Act of 2007 was the first major step to improve the fuel efficiency of US-manufactured vehicles in more than thirty years. This legislation increased the CAFE standards for automobiles and light trucks, setting a target of 35 miles per gallon for the combined fleet of cars and light trucks by model year 2020. It also increased required use of renewable fuels in gasoline, including advanced biofuels such as cellulosic alcohol starting in 2016, and introduced new procedures including the trading of fuel economy credits amongst auto manufacturers.

Now, increased world demand for crude oil, limited US refinery capacity, and threats of supply disruption from the war in Iraq, for example, are causing gas prices to continue to rise dramatically.

 

One noteworthy difference between now and the early 70s is the comparative lack of urgency. There has been no physical shortage of gasoline at the pump, and, having been through this before, expectations have changed. Before, the prevailing wisdom was that prices were destined to keep growing. Today, there are several possible cures for increasing gas prices – the traditional remedies of increased production and economic downturn – and also the really attractive remedy of alternative fuel sources, now well within sight.