Egypt and Syria attacked Israel on October 6, 1973, starting the Yom Kippur War. The conflict raised fears that oil-producing states might use exports as political leverage. Those fears quickly became central to global economic policy as oil shipments and prices came under pressure.
On October 17, 1973, the Organization of Arab Petroleum Exporting Countries (OAPEC) declared an oil embargo aimed at countries seen as supporting Israel. The move sharply tightened supply for key importers and signaled that oil could be used as a strategic tool. This is widely treated as the start of the first major 1970s oil crisis.
On October 20, 1973, Saudi Arabia imposed a total embargo on oil shipments to the United States, joined by other Arab producers. Alongside production cuts, the embargo deepened fuel shortages and pushed prices higher. The episode reshaped U.S. and European thinking about energy security and foreign policy risk.
On November 16, 1973, the Trans-Alaska Pipeline Authorization Act became effective, clearing the way for construction of a major pipeline from Alaska’s North Slope to Valdez. The policy goal was to bring new domestic crude oil to market and reduce reliance on imports. While it did not solve the immediate shortage, it became part of the longer-term supply response.
On November 27, 1973, the United States enacted the Emergency Petroleum Allocation Act (EPAA). It required federal regulations to allocate petroleum products and control prices during the crisis. These controls shaped U.S. fuel markets for years and became a major focus of later political debate.
On January 2, 1974, the Emergency Highway Energy Conservation Act created the National Maximum Speed Limit, tying federal highway funds to a 55 mph cap. The goal was simple: reduce gasoline use during the shortage by lowering speeds. It marked a visible shift toward conservation as an energy policy tool.
In March 1974, Arab producers ended the embargo, restoring formal oil trade flows. However, prices remained far above pre-crisis levels, and governments treated the episode as a warning about import dependence. The economic effects continued through inflation and recession pressures.
On November 18, 1974, an agreement establishing the International Energy Agency (IEA) was signed within the OECD framework. The new agency’s early mission focused on oil supply security, including coordinated responses to disruptions. This institutionalized cooperation among major consuming countries after the 1973–1974 shock.
On December 22, 1975, the Energy Policy and Conservation Act was signed, creating the Strategic Petroleum Reserve (SPR) and establishing Corporate Average Fuel Economy (CAFE) standards. The SPR aimed to provide an emergency buffer against future supply cuts. CAFE rules pushed automakers toward more fuel-efficient cars, linking oil security to long-term demand reduction.
On October 1, 1977, the U.S. Department of Energy (DOE) activated after consolidation of many federal energy functions. The reorganization reflected a belief that energy shocks required a stronger and more coordinated federal approach. DOE became a key institution for managing energy policy during the late-1970s supply and price turmoil.
In late 1978, strikes and slowdowns in Iran’s oil sector reduced production and exports as political unrest escalated. U.S. government documents at the time noted output falling from about 6 million barrels per day to much lower levels, with exports stopping for a period. The disruption helped set the stage for the second major oil crisis of the decade.
On February 1, 1979, Ayatollah Ruhollah Khomeini returned to Iran after years in exile. The revolution soon replaced the monarchy, and political upheaval disrupted oil production and exports during a period of tight global supply. This became a defining trigger of the 1979 oil shock.
In 1979, the United States experienced a renewed petroleum crisis, including shortages of gasoline and diesel fuel and long lines at stations. Analysis at the time pointed to the sharp drop in Iranian production as a key cause, along with market and policy factors. The public impact made the oil crisis a central domestic political issue.
On July 15, 1979, President Jimmy Carter gave a televised address linking the energy situation to broader national goals and public trust. He argued the energy shortage was real and called for conservation and reduced dependence on foreign oil. The speech showed how the oil crisis had become part of a larger debate about economic stability and national direction.
On August 6, 1979, Paul A. Volcker became chairman of the U.S. Federal Reserve. High inflation was a major concern, and energy price shocks were part of the broader inflation problem facing the economy. Tighter monetary policy in the following years contributed to a shift toward fighting inflation even at the cost of recession.
On September 22, 1980, Iraq invaded Iran, starting the Iran–Iraq War. The conflict threatened production and shipping in a region central to global oil supply, keeping markets anxious after the 1979 shock. War risk added to the sense that oil price spikes could return suddenly.
On January 28, 1981, President Ronald Reagan signed Executive Order 12287 to eliminate remaining federal controls on crude oil and refined petroleum products. The action also moved to end related allocation rules that officials blamed for shortages and distortions. This decision marked a major policy turn away from the early-1970s control approach and is often treated as an endpoint of the 1973–1981 crisis-policy era.
1973 and 1979 Oil Crises (1973–1981)