Party Like It's 1979 - Oil Rises, Dollar Weakens - Can Gas Lines Be Far Behind?

Gas Rationing Under Carter Produced Long Lines at the Pumps - image Todays Campus

2009 - The Stage is Set
The price of oilhas increased this week, up to $80 per barrel, causing an added burden to the millions of economically stressed Americans. Historically, when the dollar is in decline, and fuel costs rise, there is a spike in inflation.

1978 to 1979 – The Road to Ruin

In 1978 the rising cost of oil against a constantly weakened U.S. Dollar lent to a deepening recession and eventually, gas lines. Although there were several factors that contributed to the situation, a trade imbalance, Carter’s “Windfall Profit Tax” on Oil companies, which did not take into account the fact that oil companies would reduce production, added to the falling dollar, inflation rose above 9% in 1978, after the oil prices rose against a weakened dollar. Within six months these factors contributed to a gasoline shortage which led to long lines at gas stations and in the face of falling oil reserves, the Democrat controlled Congress gave President Carter, the green light to ration gas. In addition, the rise in the unemployment rate and the rate of inflation in 1979 was linked at the time to to the weakening dollar and subsequent fuel shortage.

Stimulus programs implemented under Carter in the beginning of his administration, failed to produce any significant results, and contributed to the increase in both corporate and individual tax liabilities, which, in the end, resulted in the loss of manufacturing jobs, a loss of corporate tax revenue, as companies fled or folded, an increase dependence on foreign goods, which resulted in a trade deficit and devalued dollar, high unemployment, and eventually, with the rise of oil, nightmarish inflation, and rationing of fuel.

To fully understand how this took place; the fact that President Jimmy Carter, with little to no governing experience (one term Governor of Georgia), in concert with a party majority in both the House and the Senate, entering the White House with an existing financial crisis, may have made decisions that were naive at best; Carter prescribed to a global and progressive point of view, and governed in like manner. Higher taxes on the “rich”, and an increase in entitlement programs, eventually pounded the U.S. economy into the ground. What is mind boggling, is that this historical road map, instead of being rejected, is being embraced by the current administration, tenfold.