Oil’s price volatility is Tthe second reason why simply increasing domestic oil production cannot resolve America’s energy vulnerabilitiesis not a viable approachviable to eliminating the dangers of oil dependence is oil’s price volatility. that aAs a globally priced commodity, it is impossible to insulate U.S. oil prices entirely from the volatile global marketnsulating U.S. oil prices entirely from the volatile global market is impossible. The 2022 spike in U.S. oil prices during the Russian invasion of Ukraine proves that even as a net exporter and the world’s largest producer of oil, geopolitical tension, natural disasters, and supply chain disruptions can send domestic oil prices skyward, causing massive economic hardship for hard-working Americans.  

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It does not take an economist to understand the dangermicroeconomic economic dangers of oil dependence. Drivers who faced a national average gas price above of more than $5 per gallon for the first time ever during the Russian invasion of Ukraine already know what it’s like to be reliant on such a price-volatile good to get by; from Q2 2021 to Q2 2022, gasoline and other energy goods’ share of total consumer expenditures doubled from less than 1.5 percent to more than 3.2 percent, eating into household budgets for food, childcare, medical expenses, and more.18 Unlike other goods, most consumers can not simply find an alternative or go without oil when prices spike, —kids still need rides to school, groceries must be picked up, and the drive to the office does not get any shorter—so budgets must bend or break until prices abate.   

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Examples of such oil price shocks are commonplace throughout U.S. history. During arguably the most famous of these events, the 1973 Ooil cCrisis, arriving at the gas station on the wrong day would result in being turned away with an empty tank.19 The economic, political, and cultural impacts of this moment cannot be understated. As Professor Geoffrey Kirk argued that the fourfold increase in oil prices impacted economic growth a decade laterput it a decade later, “It continues to affect the standard of living of the populations of oil-importing countries, where economic growth is still hampered by the fourfold increase in oil prices.”20 Kirk continuedsaid, “Foreign policy, especially of the United States, is heavily influenced by the fear that supplies will be withheld.”21  

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At the peak of the crisis, when all Americans experienced understood andAmericans first experienced the true dangers of oil dependence,and government stepped in to mitigate themacted to reduce the dangers posed by oil dependence;. oOn November 7, 1973, the Nixon administration announced “Project Independence” to promote domestic energy independence.22 Over the next few years, the United States implemented a broad consensus of Americans overwhelmingly supported a wide range ofmany measures to tackle America’s immediate and long-term energy threats—to reduce oil use and develop alternative domestically-produced energy sources. To reduce the demand for oil, the nation adopted wide-ranging domestically produced energy sources. These policies such asincluded a nationwide 55 mph speed limit, fuel economy standards, and daylight saving time.23 To secure domestic energy sources, the government created the Strategic Petroleum Reserve and funded research that led to today’s $269 billion dollar U.S. renewable energy industry.  

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High gas prices affect everybody, but they hit the poorest among us the hardest, representing a greater portion of the household budgets of lower-income Americans. According to a 2024 study on oil price fluctuation and inequality, “temporary positive oil price shocks yield substantial and enduring increases in consumption, income, and wealth inequality.”25 Again, it does not take an economist to figure this out. Those who make $30,000 per year still need to purchase gas to commute to work, pick their kids up from school, and get groceries, just like those making six or seven figures. In fact, working-class Americans are often among those most reliant on gas for their daily lives. An analysis of “gasoline superusers” identified that “many of America’s biggest drivers are tradespeople… others are low- or middle-income Americans who have been pushed out of cities by rising housing prices and face long commutes.”26 The analysis found that these “superusers” drive an average of 116 miles per weekday, own vehicles that are larger and less fuel-efficient, and spend an average of about ten percent of their household income ($530 per month) on gasoline.27 Oil’s price volatility and the monopoly it holds over transportation perpetually threaten the livelihoods of these rural and small-town residents and prevent upward mobility by consuming such a large percentage of their income.   

Oil prices rose sharply in 1979 during the Iranian Revolution, in 1990 during the First Gulf War, and again during the Great Recession of 2008, when prices rose so high that paying for gas alone consumed more than four percent of the average household’s annual income.24