Why Today’s Oil Crisis Differs from the 1979 Energy Shock

With roughly 11 million barrels of oil per day—about one-tenth of global production—currently shut in and absent from the market, someone must be using less oil. Petrochemical plants operating on thin margins may be curbing output. European airlines might be cutting flights. Yet in the United States, the response appears far more subdued.

“In the U.S. we’re seeing an indifference, in terms of what we can see from consumption numbers,” said David Doherty, head of natural resources research at BloombergNEF, speaking on the sidelines of the group’s annual summit last week.

The Energy Information Administration’s proxy for gasoline consumption—“product supplied of finished motor gasoline”—shows no sharp decline since Russia’s invasion of Ukraine or the subsequent surge in oil prices.

U.S. Gas Prices: High, But Less Painful Than in Past Crises

According to AAA, the national average for a gallon of gasoline in the U.S. stands at $4.11, up from $3.15 a year ago. Yet compared to past spikes—nearly $5 per gallon in 2022 and the $4.11 peak during the summer of 2008—the burden on households is far lighter.

“$4 now is very different to $4 five years ago. And it's definitely different to $4 in 2008, which is when the last price spikes came through. $4 doesn't get you a coffee now. $4 a decade ago got you coffee plus oat milk.”

Several factors explain the reduced impact. First, inflation has eroded the purchasing power of the dollar since 2022, and even more since 2008. A dollar spent on gasoline today buys less than it did in previous decades, meaning it claims a smaller share of household budgets.

Second, the U.S. auto fleet has grown far more fuel-efficient. Drivers today get more miles per gallon—and thus more miles per dollar—than they did in 1979 or 2008. The rise of electric vehicles further insulates consumers from gasoline price swings by offering an alternative to volatile fossil-fuel markets.

Fuel Economy Standards: A Quiet Success Story

Ironically, much of the credit goes to the now-dismantled Corporate Average Fuel Economy (CAFE) standards, originally introduced in response to the 1973 oil shock. These rules were designed to reduce America’s reliance on imported oil by steadily improving vehicle fuel efficiency over time.

In 2007, President George W. Bush signed into law the first major tightening of CAFE standards in nearly 30 years, setting the stage for significant efficiency gains.

“CAFE standards — which have just been neutered — ultimately have helped,” Doherty said, referring to regulatory rollbacks under the Trump administration that paused further fuel-economy progress under Obama and Biden.

Despite these rollbacks, the standards had already reshaped the U.S. auto market, contributing to a long-term decline in oil intensity.

An Economy Less Dependent on Oil

Since 1970, U.S. oil consumption has risen by about 20%, but the economy has grown far faster—more than quadrupling in size as measured by GDP. This means the U.S. now uses far less oil per dollar of economic output than it did during the energy crises of the 1970s and early 1980s.

As a result, even when oil prices spike, the shock to the broader economy—and to household budgets—is far less severe than in past decades.