What Carter and Reagan Got Right About Oil Shocks

The conflict in Iran is unlikely to lead to 1970s-style oil rationing, but policymakers must use price mechanisms and encourage domestic energy investment to insure against unpredictable escalations, says Andy Mayer In 1979 the Iranian Revolution sparked the ‘second oil crisis’ as the price of crude oil more than doubled to $40 per barrel. Although global production only fell four per cent, then seven per cent during the following year’s Iran-Iraq war, it took time for policy and global supply chains to adjust. The price shock…