The Oil Embargo of 1973

The oil embargo of 1973 was a pivotal year in energy history, exposing the vulnerability of U.S. energy supplies and setting off an unprecedented energy crisis. Before this time, Americans had become accustomed to using energy without concern about the constancy of supply or sharp price escalations; but in 1973 expectations about energy supply changed dramatically. In that year an oil embargo by members of the Organization of Petroleum Exporting Countries (OPEC) sent our nation's oil supply plummeting as gasoline prices skyrocketed to levels previously thought impossible.

In response to oil supply restrictions, the federal government regulated oil prices from 1973-1981 to prevent price gouging by domestic crude oil producers and to ensure fair allocation of oil resources. The U.S. Department of Energy (DOE) was charged with identifying violations, recovering overcharges and obtaining restitution for states and other parties for alleged overcharges. Oil overcharge funds, also known as petroleum violation escrow (PVE) funds, came from fines paid by oil companies that violated federal oil price caps in place from 1973-1981. To date, more than $4 billion in PVE funds have been made available to states.

Oil Overcharge Funds are used for energy efficiency and renewable energy projects. More than half the account's money is channeled through DOE's State Energy and Weatherization Assistance programs and the U.S. Department of Health and Human Services' Low-Income Home Energy Assistance Program. With DOE's review, these programs grant funds to states for a broad range of energy-related programs. The Texas portion of these funds is managed by the Texas State Energy Conservation Office (SECO) through DOE's State Energy Program.

Search for Alternatives
In the long run, the oil embargo crisis was the catalyst to stimulate a national drive to develop alternative and renewable supplies of energy, as the targeted countries responded with a wide variety of new initiatives to contain further dependency on foreign sources of oil. The first government reports to recommend an energy research and development program (see EERE) appeared within weeks of that 1973 event.

SECO's Oil Overcharge Funds
Since the first distribution in 1986, Texas has received almost $326 million of these PVE funds. The last distribution was in May of 2006, after which no further PVE funds are anticipated. The state's remaining PVE funds capitalize the LoanSTAR revolving loan program, which is managed by SECO. To date, this successful, nationally-recognized energy efficiency retrofit program has saved Texas taxpayers over $199 million and has had a significant impact on environmental pollutants such as nitrogen oxides (NOx), carbon dioxide (CO2), and sulfur dioxide (SO2).

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