Accidentally Helping OPEC

As Kissinger and President Gerald Ford struggled to put in place an aggressive policy to fight the OPEC cartel, they ran up against an American public that refused to believe there was an energy crisis. Congress didn’t help. Democratic senator Scoop Jackson, in a public hearing, declared, “The American people want to know if this so-called energy crisis is only a pretext.” And the Democratic Congress fought for a low floor price and then for loopholes in the floor. Ford fought back by imposing a $1 tariff on imported oil. Four months later, he raised it to $2, which added 20 percent to the $10 cost of foreign oil.

Ford had planned a $3 tariff, but after months of wrangling, he threw in the towel. Instead, Congress forced an immediate 12 percent rollback in the price of "old" domestic oil, which was still under Nixon’s price controls. Congress shifted energy policy into reverse.

European nations proved no stronger on cooperation, though individually they did more than the United States. In 1974, taxes accounted for about 71 percent of the price of gasoline in Paris and about 25 percent in Chicago. To this day, OPEC publishes an annual report on what a terrible idea the European gasoline taxes are—and OPEC holds up the United States as an example of how to be nice and set low gasoline taxes.

In early 1979, New York Times columnist Leonard Silk wrote that many Americans were “skeptical that a shortage even exists” and suspicious that they were being “ripped off.” Time magazine reported that 69 percent of the public still believed there was no energy crisis, but that prices were rising “merely because the oil companies want to make more money”—as if the public thought Exxon had just remembered it liked making money.