The Marginal Revolution Podcast Oil Shocks, Price Controls, and War
Oct 22, 2024
The discussion dives into the seismic oil price shocks of the 1970s that transformed global markets and U.S. energy policy. Experts analyze the rise of alternative energy and the lasting impact of price controls, as well as the role of OPEC and the Yom Kippur War. There's a fascinating look at how these events shaped Milton Friedman's economic theories amid rampant inflation. The conversation highlights the cultural shifts during the oil crises, showing the societal effects of long gas lines and resource misallocation.
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1973 Oil Shock
- In 1973, oil prices tripled quickly, jumping from $3.50 to over $10 a barrel.
- This was a shock because oil prices had been stable for decades, a period known as the "golden age of oil."
Long-Term Effects of Oil Shocks
- The 1970s oil shocks led to the U.S. becoming energy independent.
- Despite short-term economic pain, this spurred alternative energy and a fracking revolution.
Three Mile Island and Energy Policy
- The oil price shocks coincided with the Three Mile Island nuclear disaster, hindering nuclear investment.
- This fostered a backwards period focused on reducing consumption instead of exploring alternative energy sources like nuclear.
