Oil Shocks of the 1970's.

There were two great oil shocks of the 1970s, in 1973, due to the Arab oil boycott after the 1973 Arab-Israeli War, and in 1978, the withdrawal of Iranian oil accompanying the revolution. The net effect of the first was to give the oil exporting nations full control over their resources, including the ability to break contracts at will. The second was a catastrophe mainly because of an induced panic, due disruption of supply agreements and inventory buildup by everybody from countries to consumers - American motorists, for example, went from keeping their gas tanks 1/4 full on average to 3/4 full - billion of gallons of gasoline withdrawn from the market at once.

Perhaps the central fact at the heart of these crises was the US transition from oil exporter to huge oil importer. Many had warned of this threat, including President Jimmy Carter, but when the catastrophe hit the prophet had no honor in his own country. The US was burdened by efficiency destroying price controls and allocation systems introduced by Nixon, so markets had little flexibility in adjusting to the shortages and price increases - the two shocks increased the price of the central industrial commodity by a factor of six or so. Naturally, the option of letting the prices increase until gas lines disappeared was wildly unpopular.

Unfortunately, despite certain gains from improved technology - fracking -, and oil from Canada and elsewhere, the dependence of the Europe and the US on the Persian Gulf oil has not gone away. That's the reason why we can't just let the Middle East do whatever it will. Energy independence is still a goal we should seek, but we have to remember that it's a project that will take decades, not years. And it will involve some unpopular alternatives - nuclear power, maybe preferably thorium based, carbon taxes, and continuing risky investment in solar.