This is what Joe Biden should do to protect the US from a spiraling oil crisis
Joe Biden has taken a firm stand against Vladimir Putin and announced a ban on Russian oil imports. “This is war,” Senator Joe Manchin said when he supported Biden’s ban, which is likely to push energy prices higher. “For better or worse, Americans need to understand that this is the price we all pay for a safer world,” said former Obama Council of Economic Advisers chairman Jason Furman. The president himself announced: “Defending freedom is going to cost.”
There is even some bipartisan support, at least for now. Across the aisle, Alaska senator Lisa Murkowski signed on to sanctions. So did Mitch McConnell: “Ratchet the sanctions all the way up.”
Yet higher gas prices pose a clear political threat to the administration. The fraught situation brings back memories of the 1970s, when the political standings of Richard Nixon and Jimmy Carter were severely damaged by an energy crisis that became worse amid international turmoil.
But this is not your grandfather’s (or the young Joe Biden’s) energy crisis. Biden can survive the politics of “Putin’s price hike”, as he called it, and has the opportunity to take bold government action that leaves Americans more secure than before.
The 1970s were different. In 1973, the Arab embargo that cut off Middle Eastern exports of oil to the United States came as a total shock to the electorate. Few Americans knew that the geopolitical landscape of global energy production had been rapidly changing. American production was declining as demand was increasing. Because energy had been so cheap, Americans lived an energy-intensive lifestyle. More than three-quarters of Americans drove to work and most did so alone. Between 1970 and 1973, the amount of imports doubled to meet demand.
As shortages accrued, and prices soared, the result was a full-scale panic at the pump. There was despair and anger. “If you can’t sell them gas, they’ll threaten to beat you up, wreck your sta
tion, run you over with a car,” reported one Miami station owner.
President Nixon couldn’t figure out what to do. In the wake of Vietnam and in the midst of the Watergate scandal, there was little sense that the US could muster any kind of military response. Outside of nuclear power, there were no real fossil fuel alternatives to promote.
The number one demand was for government to use its authority to roll back prices to before Opec hikes had quadrupled the price. But Nixon, needing the support of congressional conservatives to fight his impeachment battle, refused to act.
The situation was worse for Jimmy Carter when Americans experienced their second oil shock, as Iranian unrest in 1978 led to the return of gas lines in the summer of 1979. Once again, Americans went berserk. There were long lines, and “Carter Kiss My Gas” became a popular bumper sticker. Striking truckers tied up the nation’s highways, and angry citizens even set gas stations on fire.
Carter, a former Sunday school teacher who believed deeply in conservation and the need to abandon indulgence in favor of austerity, responded with the most tone-deaf presidential speech ever delivered. When Americans needed to know how government was going to protect them, Carter instead blamed them for living extravagantly.
Even as he installed solar panels on the roof (nuclear was off the table given the accident at Three Mile Island in March 1979), the emphasis was on using less. He certainly offered no Green New Deal-style jobs program.
At just the moment when the energy crisis required government to step in to offer immediate relief and to devise a long-term energy policy, the American government was moving to the right and Carter wasn’t going to swim against the tide.
Yet, as history shows, in times of international instability, such as in the second world war, Americans have often relied on a strong government to preserve their way of life. Growing government in times of international turmoil, including an energy crisis connected to war, can help Americans endure challenges that threaten their economic wellbeing.
Biden, who first came into political office in the middle of the energy crisis in 1973, has the opportunity to act more like Franklin Roosevelt than Nixon or Carter. Biden should immediately impose across-the-board price controls on gas and oil. He can do this because he has options that didn’t exist in the 1970s: the US is more independent, more energy efficient, more invested in alternative fuels – and, as the 1991 Gulf war showed, more willing to defend the free flow of global oil. Indeed, Biden has promised, “I’m going to take robust action and make sure the pain of our sanctions is targeted at the Russian economy, not ours.”
The horrific images coming from Ukraine give Biden some breathing space, as is evident in the polls showing bipartisan support for tough action against Russia, that his predecessors didn’t have. Even as he has shown restraint, Biden sees Putin’s actions as a struggle between democracy and autocracy. He took aim at companies exploiting the moment. “To the oil and gas companies, and to the finance firms – we understand that Putin’s war against the people of Ukraine is causing prices to rise, we get that, that’s self-evident,” he said.
He added: “It’s no excuse to exercise excessive price increases, or padding profits, or any kind of effort to exploit this situation or American consumers.”
Biden has a chance to rally the country. He can call for lower speed limits, encourage Americans who are able to continue working from home, and ask everyone to conserve. But he should also go further. Now is the time to push hard on a big, robust progressive agenda.
He should start with targeted price controls on oil and gas. The oil companies, which are reaping substantial windfall profits, should not use this moment to enrich themselves but rather to rally and stand behind consumers in the fight against Putin. At a moment of war, when the market is functioning under massive stress, governments should step in to set prices; they should be high enough to attract capital and investment but not so high as to allow Putin to fuel his war machine and harm the global economy.
As he did in the State of the Union address, Biden should also push for the rest of his agenda to lower costs for American families, from rent control to an investigation into meat prices, to caps on prescription drug prices to college debt forgiveness to subsidized child care. In truth gas prices, as much as they are the most visible tracker of inflation, comprise a small amount of consumer spending – especially compared with these other essential items.
Finally, Biden should fight for his clean energy agenda, and he should promote it as a jobs act that will bring growth and independence. The bipartisan infrastructure bill was a historic first step. In 1956, Eisenhower passed the National Interstate and Defense Highways Act in the name of national security. The time has come to rebrand Build Back Better into the American Security and Democracy Act and pass it.
Putin’s war presents an opportunity to defend democracy, shore up American security, and chart a path toward a fossil-free future. It is time for Biden to embrace the Rooseveltian tradition of using government in times of turmoil. By doing so, he will strengthen our nation, and the resolve of voters, to support the tough steps that will be essential to containing and rolling back Russian aggression.
Meg Jacobs teaches history and public affairs at Princeton University and is author of Panic at the Pump, about the 1970s energy crisis