729Transition Engineering
© 2008 Taylor & Francis Group, LLC
13.2 We have a historical example of the kind of problem that the supply–demand gap
can cause from the 1970s’ oil shocks and the dynamics of the world oil supply
over the past four decades. On October 5, 1973, the Yom Kippur War started when
Syria and Egypt attacked Israel. The United States and most Western countries
showed support for Israel. Several Arab nations and Iran imposed an embargo
and curtailed their production by 5 mbpd. There had been no spare production
in the United States, the largest oil-producing nation, since 1971, but other non-
OPEC producers were able to increase production by 1 mbpd, resulting in a 7%
decline in supply. By the end of 1974, the price of oil had ...