Jimmy Carter succeeded Gerald Ford as U.S. president from 1977
to 1981. In 1977, Carter convinced the Democratic Congress to create the United
States Department of Energy (DoE) with the goal of conserving energy. Carter
set oil and natural gas price controls, wore cardigan sweaters, had solar hot water panels
installed on the roof of the White House and had a wood stove in his living
quarters.
In 1979, the second oil crisis occurred in the wake of the Iranian Revolution. Iran
was the second largest oil producer in OPEC nations. Its reduced oil production
caused the spike of oil price. In 1980, following the Iraqi invasion of Iran, oil production in Iran nearly
stopped, and Iraq's oil production was severely cut as well. The price of oil rose
from $15 in April, 1979 to $39.50 over the next 12 months.
To combat hyperinflation, the newly appointed Federal
Reserve Chairman, Paul Volcker, pursued a tight monetary policy, which
resulted in sky-high interest rates. The economy entered a deep
recession in 1981 and 1982, but inflation was largely under control over the next three decades.
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