The implications are serious. First of all, rising dependence on increasingly costly foreign oil tends to degrade the value of the dollar and exacerbates inflation. The heavy and growing involvement of the United States in the world oil market not only worsens the domestic problem, but puts less affluent importing countries at a growing disadvantage in competing for supplies. The foreign policy consequences of this strained situation are twofold: Oil-producing countries find it increasingly feasible to exact political concessions from importers, and U.S. relations with other oil importers are weakened.
The United States has been a net importer of energy since the early 1950s. Energy was cheap, and it grew cheaper throughout the 1950s and 1960s; little concern was expressed as consumption more and more outpaced domestic production. In constant 1948 dollars, the price per barrel of crude oil at the wellhead fell from $2.50 in 1948 to $1.85 in 1972; imported oil was even cheaper. Most other forms of energy—notably electricity and coal—declined even more in price than oil. Net energy imports rose on the average more than 10 percent annually throughout the 1960s, more than doubling in that decade. Sources of supply became increasingly concentrated in the Middle East and Africa.