America's energy crisis began symbolically in the third week of October 1973. Egypt and Israel had been at war for eleven days when President Richard Nixon announced his decision to resupply the Israeli Air Force. Two days later, King Faisal ordered a 25 percent cut in Saudi Arabia's oil output and an embargo against the United States. Other Arab members of the Organization of Petroleum Exporting Countries (OPEC) followed suit. The next week, OPEC unilaterally raised the price of oil from $3.00 to $5.11 a barrel. Two months later, OPEC raised it again to $11.65.

These events were the political and economic manifestations of secular trends and past policies; OPEC was merely the catalyst. Depletion of easily accessible oil and gas deposits in the United States, masked by the draw-down of reserve inventories, was the real cause. Public policies that maintained an artificial equilibrium between supply and demand had prevented gradual adjustment through the price mechanism. Thus, declining real prices had discouraged new supplies but had not dampened the growth of demand. As a result, the transition to shortage appeared abrupt, in the form of curtailments in the interstate gas market and a shift of control over oil prices from the Texas Railroad Commission to the government of Saudi Arabia.

Transition from abundance to shortage was accompanied by increased concentration in the energy industries. The surfeit of oil and gas during the 1960's inspired forward and backward vertical integration through a wave of mergers.