The OPEC Oil Embargo of 1973 caused an energy crisis in the United States that not only
hit Walt Disney World hard, but hit the tourism industry as a whole.
But luckily they got through it and that kind of thing only happens once in a lifetime.
I mean, how often would they really have to worry about a nation wide fuel shortage?
It likely wouldn’t be a problem for decades… or ya know, it’d happen again six years later.
The energy crisis of 1979 arrived just six years after the last one had disrupted the
tourism industry in America and like the crisis of ‘73, its origins begin overseas.
Over the course of a few rapidly escalating years, Iran was experiencing a revolution.
What started as demonstrations would eventually evolve into strikes which would then evolve
into the overthrow of their Shah.
Specifically, in September and October of 1978, those strikes included 37,000 oil refinery workers.
The government announced that they’d be able to maintain their oil exports despite
the strikes, but even the optimistic estimations meant a cutback of up to 40%.
In December of 1978 OPEC, or the Organization of Petroleum Exporting Countries, announced
that they intended to raise the price of light crude oil by over 14% over the course of 1979.
In short, their justification for the decision was to try and offset the decline in the US
dollar over that decade, to try and offset the decline in exports from Iran, and to encourage
more buyers to switch to heavy crude oil.
By January of 1979 those prices hikes began to go into effect and the revolution in Iran
reached its peak when its leader, Mohammad Reza Shah Pahlavi, was exiled from the country
and replaced by Grand Ayatollah Khomeini.
It’s a revolution that meant drastic change for the country, change that we still see
to this day.
It also unfortunately meant trouble for their oil industry.
Oil output in Iran dropped from 5.8 million barrels a day before the revolution to just
445 thousand barrels a day.
That’s a 92% drop in output.
Now here’s where the 1979 energy crisis is unique.
14% hike in oil prices.
92% drop in Iranian oil output.
These kind of numbers sound scary, but were they?
It was later estimated that the decline in oil output by Iran would amount to just a
4% drop in total global oil production, and that it would specifically mean a 5% drop
in oil imports to the United States.
As for that 14% hike in price to account for it?
Experts estimated it would culminate in a rise in gasoline prices of one cent per gallon.
Not really the makings of a national energy crisis.
But fear is a powerful emotion, and the nation had just experienced a very real energy crisis
just six years prior.
Americans still had fresh memories of waiting in line at gas stations for hours and the
uncertainty of whether or not they’d be able to heat their homes.
They no longer had to wonder what an energy crisis would be like.
They knew.
So between a hike in prices that could mean more down the line, and the unrest in Iran,
people began to pre-emptively hoard gasoline.
That didn’t just apply to the drivers either.
Major oil companies began to cut back on how much they supplied stations with, which in-turn,
just made the hoarding even worse.
In a strange twist, the fear of a fuel shortage was creating a fuel shortage.
By 1979 fewer people were driving to Disney World than just before the ‘73 crisis, but not by much.
80% of Disney’s guests were still arriving by car.
Disney noted during an earnings report that the gas shortages in the US began to impact
park attendance in mid-May at Disneyland and in mid-June at Disney World.
It would mean an average drop in attendance of 15% that summer and a drop as high as 20%
during the 4th of July holidays.
And while Disney didn’t have a hand in the start of the crisis, they still had an opportunity
to try and deal with it.
One insight Disney and other tourist attractions in the Florida area learned was that visitors’
hesitation with making trips wasn’t based on an attempt to conserve but was based on
a fear that once they got to Florida they’d have trouble finding gas during their stay.
So in June Disney created their own gas ‘teletip’ hotline.
Staffed by nine people in Lake Buena Vista, and updated every single morning with new
data, the hotline offered information to callers on where they could find gas stations with
gas, not only around the Disney area, but anywhere in the country between the caller’s
home and Disney.
Operators were able to help callers plan their drive down based on routes that had the best
gas availability.
Disney weren’t the only ones with such an idea.
The state of Florida’s Department of Commerce also launched a $500,000 advertising campaign
encouraging tourists from the Northeast to visit the state, and paired it with their
own free hotline that offered similar information.
The state did their part in trying to ease the shortages by dipping into their emergency
reserve of fuel and distributing it to participating gas stations who were willing to stay open
24/7 to meet demands.
With an economy so tied to tourism, their stance was that energy conservation meant
cutting down on waste but not ending vacations altogether.
Disney also adjusted to the shortage by cutting their operating hours by one hour a day and
once again focusing more of their advertising efforts on local cities to offset the drop
in out-of-state visitors.
And while it didn’t seem like an immediate impact, Disney had EPCOT Center on it’s
side during the energy crisis.
The park itself wouldn’t be finished or opened for another three years, but it was
in the works.
That gesture of planning and building a whole second theme park was enough to send the message
that Disney was invested in their Florida resort, and they they expected a healthy growing
business there.
It kept morale, and more importantly, stock prices up.
That’s not to say that the whole 1979 crisis didn’t have it’s own long-term impacts
on Walt Disney World.
One of the often-postponed hotels for the resort was Disney’s Persian Resort, which
was intended to be situated along Bay Lake, up against Tomorrowland in the Magic Kingdom.
It was put on the backburner while the company focused on expanding their park offerings.
Allegedly, Shah Pahlavi, who was no stranger to Disney parks, agreed to help fund the resort.
However with his ousting in early 1979, that was no longer an option.
Similarly Disney had been meeting with officials in Iran prior to the revolution to propose
an Iranian pavilion at EPCOT Center’s upcoming World Showcase.
According to Disney executive and eventual Disneyland president, Jack Lindquist, Iran
wasn’t likely going to fund the pavilion, however if there was any chance of it happening,
the revolution just months later ended it.
Behind the scenes Disney, like many others in the country, started to put a renewed focus
on alternative forms of energy to curb dependance on oil.
This is when plans would begin for an experimental plant that was designed to convert waste into electricity.
It was called the Solid Waste Energy Conversion plant, and I have a whole other video about
that if you’d like to learn more.
While the ‘73 crisis ended abruptly with the lifting of an embargo, the ‘79 crisis
just lingered before fading.
People adjusted, and as other nations expanded their oil production, it helped to keep prices
from getting too high.
We began to see a push for cars with better fuel economy.
Airline travel continued to grow and while planes obviously still used fuel, it didn’t
come with the fear of being stranded with your car and no place to get gas.
For Disney, it was a far easier crisis to manage than the one they faced in 1973.
No large scale layoffs.
No drastic shifts in planning.
No fear for the future of their industry as whole.
They were a company that was no stranger to struggle and perhaps it was that experience
in weathering storms that allowed them to get through this one.