Carter Creates Energy Dept: Responding to Oil Crisis

Lines at gas stations stretched for blocks, thermostats were turned down to 65 degrees in federal buildings, and Americans were beginning to understand that cheap energy was not a birthright. On August 4, 1977, President Jimmy Carter signed the Department of Energy Organization Act, consolidating dozens of scattered federal energy programs into a single cabinet-level department. The new agency inherited responsibilities from the Atomic Energy Commission, the Federal Energy Administration, the Federal Power Commission, and several other bodies that had been managing pieces of energy policy with little coordination. The creation of the Department of Energy was Carter's response to a crisis that had been building since the 1973 Arab oil embargo. That embargo had quadrupled oil prices overnight, triggered gasoline rationing, and exposed America's dangerous dependence on foreign petroleum. The Iranian Revolution in 1979 would deliver a second oil shock that made the problem even worse. Carter called the energy crisis "the moral equivalent of war" and made it the centerpiece of his domestic agenda. The new department, which began operations on October 1, 1977, with roughly 20,000 employees, took on an enormous portfolio: nuclear weapons production and testing, energy research and development, oil and gas regulation, and the strategic petroleum reserve. James Schlesinger, former CIA director and Secretary of Defense, became the first Secretary of Energy. Critics from both parties questioned whether a new bureaucracy was the right solution to an energy crisis driven by market forces and geopolitics. The department survived, however, because the problems it addressed never went away. The DOE today manages the nation's nuclear arsenal, funds basic science research through its national laboratories, and oversees an energy portfolio that has expanded to include renewable sources Carter could barely have imagined in 1977.