In October 1973, oil-producing Arab states cut shipments to the United States during the Yom Kippur War, tightening supplies and driving sharp price increases. The embargo was lifted in March 1974, but it pushed the U.S. to rethink reliance on imported oil and consider stronger federal controls and new energy institutions.
Congress authorized the Trans-Alaska Pipeline to move North Slope crude oil to the ice-free port of Valdez. The law aimed to speed new domestic supply during a period of high concern about shortages and rising prices.
The Emergency Petroleum Allocation Act (EPAA) required the federal government to set rules for allocating petroleum supplies and controlling prices. These controls were meant to manage shortages and prevent rapid price spikes, but they also introduced complex regulations that later became targets for deregulation.
In 1974, Congress strengthened federal energy management by creating the Federal Energy Administration (FEA) to oversee oil allocation and pricing programs. This helped centralize crisis-era regulation, but it also increased the scope and durability of federal involvement in oil markets.
The Energy Policy and Conservation Act (EPCA) was signed in December 1975. It established major emergency-response and conservation tools, including the policy basis for a Strategic Petroleum Reserve, and it extended key petroleum control authorities developed during the crisis years.
Oil started flowing through the Trans-Alaska Pipeline System in June 1977, linking Prudhoe Bay to Valdez. This new stream of domestic crude increased U.S. supply options and affected debates about how quickly the country could reduce imports under different pricing rules.
President Jimmy Carter signed the Department of Energy Organization Act, consolidating many federal energy responsibilities into a new cabinet department. The Department of Energy later became a central institution for administering petroleum regulations and for managing the transition away from them.
In November 1978, Congress enacted major parts of the National Energy Act, including the Public Utility Regulatory Policies Act (PURPA). While not oil deregulation itself, these laws pushed conservation and alternative supply, shaping the broader policy environment in which crude oil controls were increasingly questioned.
On April 5, 1979, President Carter announced steps to begin decontrolling categories of crude oil prices as part of a phased approach. The goal was to increase domestic production incentives while pairing decontrol with policies meant to address fairness and public costs.
Congress enacted the Crude Oil Windfall Profit Tax Act in 1980 as a compromise linked to crude price decontrol. The tax was designed to capture part of the revenue increase producers could receive as regulated prices moved toward market levels.
President Ronald Reagan issued Executive Order 12287 to eliminate remaining federal controls on crude oil and refined petroleum products. This decision marked a decisive shift from crisis-era regulation toward market pricing, and it also ended related regulatory mechanisms tied to controls.
In 1986, global oil production rose sharply as OPEC shifted strategy to regain market share, contributing to a major price collapse. For the U.S., the downturn tested the newly deregulated environment: market prices fell without federal price ceilings, and the industry faced rapid changes in revenues, investment, and production incentives.
US Oil Deregulation and Market Changes (1973–1986)