Booked: How the 1970s Energy Crisis Changed American Politics

Booked: How the 1970s Energy Crisis Changed American Politics

An interview with historian Meg Jacobs about her new book, Panic at the Pump.

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Booked is a monthly series of Q&As with authors by contributing editor Timothy Shenk. For this special podcast edition, Tim spoke with Meg Jacobs about her new book, Panic at the Pump: The Energy Crisis and the Transformation of American Politics in the 1970s (Hill and Wang, 2016). Use the player above to listen to a recording of their conversation, or read an edited version below.

Timothy Shenk: Panic at the Pump begins with a young George H. W. Bush as he’s setting out to Texas in the aftermath of the Second World War. Why start here?

Meg Jacobs: After graduating from Yale, George H. W. Bush heads out in search of oil to West Texas. He decides he doesn’t want to follow in his investment banker father’s footsteps, and he has this idea that oil is going to be the new booming field. His quest embodies the mid-century American belief, which lasted until the Arab embargo in 1973, that we were invincible and that we could live this lifestyle of abundance predicated on cheap and plentiful fuel forever.

Shenk: Bush isn’t often thought of as a very ideological figure. But you argue that, at least with regard to oil politics, he was part of an emerging conservative movement. How did the two fit together?

Jacobs: What’s really interesting in telling this history of American politics through oil is you get a different landscape of conservatism. People like Bush were very worried about American invincibility early on. After about two decades of Bush being quite successful in the oil business we start to reach our peak of domestic production. He is well positioned to know the threat that this might pose to American interests. So you have him articulating the need to roll back regulations, like all of the new environmental regulations, because he believes this regulatory world will reduce production and pose a threat to our standing in the world. This deep commitment to deregulation is front and center for conservatives like Bush. It’s animated with a foreign policy dimension, but very much committed to undoing the regulatory world that the country had lived in since the New Deal.

Shenk: But as you explore in the book, that commitment to deregulation wasn’t so much evidenced in Richard Nixon’s response to the crisis. Why did he have such a different approach?

Jacobs: Nixon, who we think of as a conservative ideologue, gets elected in 1946 on an anti-Communist ticket. But he is incredibly pliable and politically opportunistic, and he grows up in the New Deal world. He understands that when Americans are feeling some kind of pocketbook distress, it’s the government’s responsibility to do something about it. To give two examples of how Nixon defies our characterization of conservative and liberal: 1) he embraces the environmental movement, and 2) he puts into place across-the-board wage and price controls, which was even more popular with American voters. He was flexible in that way.

Shenk: So, let’s talk a little bit about the oil crisis specifically and the energy crisis that it’s a part of. Some people will have specific memories, a lot of us will just have vague images of long gas lines. What was the energy crisis?

Jacobs: The energy crisis as Americans understood it at the time—which is very different than our understanding today which is more concerned with climate change—was a supply crisis. The abundance that Bush discovered out in West Texas was disappearing. Americans were becoming more dependent on imports and this was driving up inflation and making the United States vulnerable on the world stage. So the energy crisis, as Americans experienced it, was a shortage of oil, this precious commodity that was vital to every aspect of American life from fueling your cars to heating your homes to powering industry. The shortage began when Arab members of OPEC put in place an embargo on oil to the United States and cut back production in response to American support of Israel in the Yom Kippur War in October 1973.

Shenk: Who did Americans blame for this at the time?

Jacobs: Most Americans didn’t know that we imported any oil at all because that was a relatively recent phenomenon. When Nixon saw that we were reaching our peak of production, he decided to repeal a ban on imports. Between 1970 and 1973, the number of imports doubled—by 1973 we were importing about a third of our oil. But Americans didn’t know any of this, so who do they blame for the crisis? The number one villain is the major oil companies, known simply as Big Oil. The idea is that these all powerful oil companies are imposing an artificial shortage to protest environmental regulations and price controls. Everyone starts going after Big Oil, from Ralph Nader to an emerging consumer movement to liberal Democrats. Politicians in turn get blamed for not coming down harder on Big Oil. Scoop Jackson, who is an ambitious Democrat from the state of Washington, realizes that he can make political hay over this shortage. He calls all of the leading Big Oil executives to Washington and accuses them of charging obscene profits. This is the popular mentality at the time.

Shenk: Can you talk a little bit more about Scoop Jackson? He’s one of the most fascinating characters in a book that’s filled with them. I’ve come across Jackson in the past mostly as a predecessor to the neoconservatives, people always talk about his foreign policy, but the domestic record and his Cold War liberalism aren’t remembered as often.

Jacobs: Jackson typifies the endurance of a New Deal liberalism. He believes that a shortage is a problem that government should solve, and he’s not alone in this. The 1970s is usually framed as the decade that saw the rise of conservatism driven by an incipient grassroots that will culminate with the election of Ronald Reagan in 1980. But in fact, these New Deal liberals are still very powerful and he’s at the center along with people like Ted Kennedy and Tip O’Neill, which is why you have price controls in the first place. Nixon is facing a Democratic Congress. They pass the measure giving him the power to enact price controls sort of cynically thinking he’ll never go through with it. Then he outflanks them.

Shenk: One of the things I love most about the book is the way you follow the ramifications of the energy crisis—it’s never put in its own little silo, you see it overlapping with civil rights, you see it with the Vietnam War, and you see it with Watergate, which pretty soon will have Nixon out of the White House, leaving poor Jerry Ford to take over. So what happens to Ford when all of a sudden he’s charged with managing American energy policy?

Jacobs: Ford is probably one of the least studied presidents but he’s really consequential and more ideological than most people think. If you look at his policy, including on energy, he is pushing hard for a market agenda. For example, 1974–75 is a recession. He believes first and foremost that the problem is inflation, and that the biggest thing driving inflation is energy. His solution is to actually get rid of controls because that will stimulate the market. It’s kind of the classic Milton Friedman argument, which he was writing week in and week out in his Newsweek columns.

Shenk: Another important character in the book is James Schlesinger, who’s introduced as Secretary of Defense under Richard Nixon and then pops up as the first Secretary of Energy under Jimmy Carter. Who was he and how could he make that transition?

Jacobs: He’s an interesting study along with Kissinger. They both do all their training at Harvard but Schlesinger, unlike Kissinger, is an economist. He thinks in terms of resources and access to resources. During the Arab Embargo, Schlesinger is quite frustrated because he’s Secretary of Defense and some saw this blockade as an “energy Pearl Harbor,” but there can be no show of force because of the war-weariness over Vietnam. Nixon, when he announces his first response to the embargo, declares Project Independence. By framing it that way, he suggests the problem is dependence and everything in our energy policy is going to be aimed towards making us self-sufficient.

It’s interesting Carter taps Schlesinger because again, you have a Republican in charge of overseeing this new department with tens of thousands of employees, but he says the very problem is there is too much government regulation, with price controls and allocations controlling the domestic energy market. In 1979 when there is instability in Iran, he anticipates this will lead to a shortage. He’s telling Carter that the government is going to get blamed, given its involvement in the market, which is exactly what happens.

Shenk: How does Schlesinger then fit in with the Carter approach to energy more broadly?

Jacobs: They are pretty simpatico. Carter is not a traditional New Deal Democrat, he’s much more market-oriented.

Shenk: Is there a technocratic mentality in putting them together?

Jacobs: Yeah, Carter’s the small business peanut farmer.

Shenk: And he’s also an engineer who wants to solve problems.

Jacobs: What they shared was this idea that we actually need to get rid of controls. The Republicans wanted to get rid of controls to stimulate production, Carter wanted to get rid of controls to stimulate conservation. For him, higher prices would induce Americans to cut back. This is the precursor to the debates of supply side and how you remedy the economy. But the end goal would be the same: you have increasing energy prices. The Democrats found this to be abhorrent, or at least the Northeastern liberal Democrats found it to be abhorrent.

Shenk: It’s an attack on the poor and on their region. If you’re Teddy Kennedy, that’s a double-hitter.

Jacobs: Right, exactly. And so what’s interesting about Carter is the way in which somebody like Schlesinger really embodies his beliefs about what has to happen. So we remember Carter for proposing an unpopular solution to our energy crisis: use less. Carter is caught because there are three different constituents in the Democratic party and he needs to speak to all of them but is sympathetic to only two of the groups. The first constituent is the South and Southwest where all the energy producers actually are. They’re not in the Republican Party, yet, but they, like the Republicans, are certain that the problem is too much government interference. So there are “Drive 75 and Freeze ‘Em Alive” bumper stickers in Louisiana, Texas and Oklahoma, which means we’ve got a lot of energy here, which we won’t share unless you let us sell it for whatever price we want to sell it for. The second constituency is the environmentalists. Carter installs solar panels on the roof of the White House and makes a promise to the environmentalists that by the year 2000, we’ll get 20 percent of our energy from the wind and the sun. Finally there are the Northeastern liberals who are furious at Carter for not doing more to relieve the economic distress that’s caused by the energy crisis.

Shenk: Did the campaign behind renewable energy promises try to recapture that New Deal spirit? You write about the renewable energy movement, which its advocates depicted as the next big government program Americans could unite behind.

Jacobs: Yeah, except that’s not the bet that Carter ends up making. If everyone remembers the gas lines, no one remembers the Synthetic Fuels Corporation, which was Carter’s big play. It infuriated the environmentalists because it was coal-based. This goes back to Carter’s foreign policy perspective, and his fear of being dependent on the Middle East. He stumps for synthetic fuels and gives speeches across the country particularly in coal regions, saying the United States is the Saudia Arabia of coal, therefore we’ll be okay. Amazingly, he gets this massive bill through Congress. No one is particularly excited for it, but everyone holds their nose and votes for it. It doesn’t really achieve anything for him politically.

Shenk: Was Carter just doomed to fail?

Jacobs: As James Schlesinger says, the basic constituency for conservation is the future. No politician wants to stake their fortune on that.

Shenk: So I see this book very much as a piece with your first book, Pocketbook Politics: Economic Citizenship in Twentieth Century America, which focuses chiefly on the United States during the New Deal era. We’ve talked a lot about Washington politics so far, but in both of these works you connect what’s happening in D.C. with the world outside the beltway. In Pocketbook Politics, you argue that policymakers established a powerful relationship with the grassroots—that top-down and bottom-up change fed off each other. In Panic at the Pump, it’s almost the opposite; the government never seems to get it right, and it ends up alienating Americans at every turn.

Jacobs: That’s an argument that I see as really at the core of the book. So if Watergate and Vietnam taught Americans that they could not trust their political leaders, then the energy crisis taught them that Washington didn’t work. In the summer of 1979, Levittown, Pennsylvania, which is an iconic symbol of post-war prosperity and peace and harmony, goes up in a gas riot. Truckers are blockading the intersections where all the gas stations are and local citizens are joining in, lighting two cars on fire and chanting “More gas! More gas!” It’s this moment of unraveling of the faith that citizens had had in government to fix their problems. “Carter Kiss My Gas” becomes a popular bumper sticker.

Shenk: The violence of some of these protests is one of the book’s most striking aspects.

Jacobs: The reason why I settled on the title Panic at the Pump is because when there’s a panic you have to ask why. Part of what drove the gas lines was not the shortage, which was never very acute. Economists love to debate the actual number, but it was somewhere in the range of 5 and 10 percent, not enough to really alter America. But that didn’t matter. The perception was that this was the end of American life as citizens had known it. The reason they go rushing to the gasoline stations to tank up is this fear that no one is going to help them. You have this almost irrational consumer behavior where drivers are driving around with a month’s supply of gasoline in their tanks rather than keeping it in the ground, thereby exacerbating the shortage. People are lining up and running out of fuel on the gas lines, you have fistfights, you even have some murders. It is this panic mentality that I think comes in the wake of a vacuum of leadership.

Shenk: Another key through-line running between your books is the question of inflation. It becomes this specter haunting modern liberalism, always threatening to break apart the coalition, even in the golden age of Truman through Kennedy, before finally ripping it open in the 1970s. Why is the liberal coalition, in particular, so vulnerable to inflation?

Jacobs: The short, glib answer is that Democrats do depression better than they do inflation because they have more tools at their disposal. So they can stimulate the economy through developmental projects and public works—

Shenk: They can cut taxes, fiddle with monetary policy—the usual Keynesian remedies.

Jacobs: But inflation is harder to control with these tools. There’s nothing really to give out, there’s only stuff to take away.

Shenk: So growth is when liberalism is working and inflation is when it’s coming apart.

Jacobs: And inflation triggers this effort to blame different constituents for who’s causing the inflation and you see this with the energy crisis. During the 1973–74 shortage, emergency legislation gets pushed through and sets up allocations and price controls and all these amendments about who should have less so I can have more. For example, there was a popular amendment to ban bussing based on the idea that if we’re really facing scarcity, then how could we possibly indulge in this social policy. This is a convoluted connection but made sense to people as a way to deal with these difficult-to-solve economic problems. Carter believes that inflation is actually a bigger problem than depression, but none of the Democrats share this belief. Carter appoints Paul Volcker as head of the Federal Reserve—

Shenk: Who will start a recession as a consequence.

Jacobs: Right, and that’s actually how you deal with inflation. You trigger a recession. But that’s not a policy that is going to be acceptable for a Democratic president to fully sell to a Democratic Congress. So, the short answer is, the nature of the problems divided rather than united.

Shenk: Do you think Ronald Reagan was smart? Or was he just lucky?

Jacobs: Well he was dogmatic, so irrespective of what the consequences might be, the very first thing he does through executive action when he becomes president is abolish all price controls on energy. It’s this symbolic act to show that the “nightmare” of the 1970s is over and he’s pardoned the oil companies. When he runs in 1980, he uses the energy crisis as exhibit A for why liberalism fails. Then he gets lucky. He comes in at the peak of oil prices. The high prices trigger two things: 1) the discovery of additional supply in places like the North Sea, and 2) energy efficiency, in part resulting from some of the public policies Carter had put in place. What had been a shortage turned into a glut, and then you have the collapse of energy prices, which Reagan can then trumpet as a success for him.

Shenk: Pocketbook Politics is centered on the United States. But you can’t tell the story of the energy crisis as a purely domestic event; it has to be, at least in part, a global history. And the benefits of taking this more geographically expansive approach are clearest when you highlight one unintended consequence—or maybe a quasi-intended consequence—of Reagan’s deregulation, namely increased American dependence on Middle Eastern oil. You dug up this fantastic line from an article in the New York Times arguing that with the Gulf War, “Mr. Bush has replaced foreign policy with energy policy.” What did that mean?

Jacobs: In the Nixon administration all the way through Carter, there was this great fear of dependence, in large part because Washington leaders felt immobilized to take any military action. This changes under Reagan. Carter is the first to articulate the centrality of the Persian Gulf as a vital American national interest, which if threatened, will trigger the use of force. But Reagan is the one to really make that commitment more tangible, with the creation of regional command for the Middle East, and to be committed to expanding America’s foreign policy footprint in a more aggressive way in this part of the world. By the time you have the first Gulf War in 1991, there’s no longer the sense that independence is the goal. This shift is quite explicit. I was amazed by documents from the George H. W. Bush Library, which show how they jettison discussion of independence in favor of a language of security. When Saddam Hussein invades Kuwait, the response is immediate, because they’ve had this perspective in mind for quite some time. Now they have the resources to do it, and it helps that the Cold War is over so they can respond with military force without fear of triggering a bigger war.

Shenk: Turning to the present, we’re speaking on the day that it looks like Donald Trump has consolidated the Republican Nomination. It’s easy to come up with works of American history from the last generation that would explain how we got to Ted Cruz, but it’s a lot harder to think of ones that would lead to Trump. Do you think I’m overreacting to the latest headlines, or does this this suggests that there’s a weakness in the scholarship? Put more broadly, where do you think Trump comes from?

Jacobs: I won $100 because back in August I bet Trump would still be in the election in February. To me, he was easy to see coming, because I do think he taps into a certain kind of alienation of the voters, a sense that Washington is not taking care of basic needs. That view really accelerated during the energy crisis of the 1970s. So in a way Trump is capitalizing on the loss of confidence that Americans have suffered since that era. Ronald Reagan ran against Carter’s malaise, and Trump, in a sense, still is too.

Meg Jacobs teaches history and public affairs at Princeton University and is author of Panic at the Pump: The Energy Crisis and the Transformation of American Politics in the 1970s.

Timothy Shenk is a graduate student in history at Columbia University and a Dissent contributing editor. He is the author of Maurice Dobb: Political Economist.