Gas Price Surge: Remembering Past Crises and Today’s Concerns
Imagine this scenario: you’re heading out to watch Blazing Saddles at the drive-in with friends. You get in your car, start the engine, turn on the radio, and hear Elton John’s “Bennie and the Jets” begin to play. It’s an ideal evening, except for one problem: your fuel gauge is low, meaning you’ll have to wake up at 4 a.m. to wait in a gas line for hours, assuming you’re fortunate enough to find fuel.
For many, a gas crisis is a theoretical concept. We see prices rise, we voice our complaints, and we might reduce our driving. What is less familiar—possibly because some never experienced it—is the other type of gas crisis, where cost is irrelevant because there is simply no fuel to purchase. This was an era when your license plate dictated which days you could drive, and a colored flag at the gas station was the day’s most critical update. This version of America was real, and it could be returning sooner than anticipated.
U.S. gas prices have increased by almost 11% compared to last year. Tensions with Iran have constrained the Strait of Hormuz—a vital channel for about 20% of the world’s oil and liquefied natural gas daily—and Qatar, a producer of 20% of global LNG, has completely stopped production. For the average American, the reaction is often to watch pump prices rise with a sense of helplessness. However, for those over 65, the present situation evokes a distinct form of anxiety.
What happened during the 1970s gas crisis?
In October 1973, Arab nations within OPEC declared an embargo against the United States as retribution for U.S. military aid to Israel in the Yom Kippur War. Their action went beyond raising prices; they reduced supply. In a matter of weeks, pump prices skyrocketed by 40% in one month. By the middle of 1974, the real cost had tripled, and fuel was increasingly scarce.
Returning to that drive-in night: you agree to collect two friends on the way (carpooling, which gained traction during World War II rationing, was already common and became even more so due to the crisis). The theater seems less crowded, though it’s unclear if that’s due to carpooling. Regardless, you enjoy the Mel Brooks film, return home, and set a 4 a.m. alarm.
Before dawn the next day, you’re back in the car, praying you have enough gas to reach a station flying a green flag. To avoid a futile wait, you learned the flag system. Green indicated fuel was available. Yellow signaled rationing—you could get a limited amount. Red meant the station was out.
You pass your usual station, but a red flag waves in the wind. You proceed to the next, hoping to get ahead of the line that already snakes down the street. To conserve fuel, you turn off the engine, shift to neutral, and push the car forward periodically. You wait for one hour, then two, then three. Just three cars from the pump, an attendant posts a handwritten sign: Out of Gas.
As lines grew, states introduced odd-even rationing based on license plate numbers. An odd final digit permitted purchases on odd calendar days, and an even digit on even days. Some states limited purchases to $1 of fuel (approximately $8.47 today), equating to about four gallons. Individuals made several trips per week just to maintain a half-full tank. Missing your designated day meant a 48-hour wait, hoping supply would last.
Alongside these steps, the U.S. established a national 55 mph speed limit to improve fuel efficiency and enacted federal fuel economy standards, which boosted average vehicle efficiency by 81% from 1975 to 1988. The Strategic Petroleum Reserve was also formed in 1975 as a contingency supply.
What about today?
The current situation appears to echo the 1970s: a Middle Eastern conflict disrupts a key oil region, global supply shrinks, and American consumers pay the price. However, there are significant contrasts. The U.S. was a net oil importer in 1973, whereas it is now the globe’s top oil producer.
This might suggest minimal impact, but oil is traded on a global market, with prices tracking the international Brent crude benchmark. Furthermore, while the U.S. has abundant oil, numerous domestic refineries are configured for imported oil, not the light, sweet crude abundant in the Permian Basin.
Rationing has not returned to the U.S. currently, though Myanmar has reinstated odd-even rules. A more recent example than the 1970s is Superstorm Sandy in October 2012, which damaged seven petroleum terminals in New Jersey and New York, crippling the distribution network. Within days, only about 25% of New York City gas stations were open. Lines in New Jersey reached 1.5 miles long, with people sleeping in their cars. New Jersey enacted odd-even rationing almost instantly, with New York City and Long Island following a week later. This fuel shortage lasted 21 days, but it was caused by a natural disaster, not an international geopolitical incident.