How Does This Iran Oil Crisis Compare to the 1979 Iran Oil Crisis?
47 years ago, Americans grappled with the financial fallout from an Iran oil crisis. Here's what we can learn from their struggles as we face another oil crisis today.
Many older Americans are feeling deja vu as they watch energy prices rise in response to the Iran conflict. For those who lived through the 1970s and remember the spiraling inflation, soaring energy prices and increasingly unaffordable homes, today's economy looks eerily similar.
Here's a closer look at the parallels between the economy Americans are facing today and the one older generations dealt with over 40 years ago.
Unless otherwise noted, the data for this story came from the Federal Reserve Bank of St. Louis, the Bureau of Labor Statistics and the Census Bureau.
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Comparing the economic aftermath of the 1979 Iran oil crisis with the one we're facing now
The 1979 Iran oil crisis came in the midst of a cost-of-living crisis that had gripped the nation for most of the 1970s. The steep drop in oil production following the revolution sent crude oil prices soaring from $14.85 to $39.50 per barrel. Prices didn't drop back into the teens until 1986.
The ripple effects will feel familiar to many Americans: Gas prices soared. Utility bills shot up. Inflation got worse. After topping 11% by 1974, inflation had started to ease, but by 1979 it was back above that level and peaked at 13.5% by 1980.
Fast forward to today, and you can see a similar story unfolding. In December 2025, a barrel of oil was selling for $57.26. By March, that same barrel cost $102.86.
Inflation was already surging before this, shooting from 1.23% in 2020 up to 8% by 2022. After dipping below 3% in 2024, it's now back above that threshold, hitting 3.3% as of March. That's almost a full percentage jump over February, when 12-month inflation was 2.4%.
Energy costs are once again a key driver, and their ripple effects across food, housing and other essentials could keep inflation elevated — even if the conflict stabilizes.
Because the situation is still unfolding, the latest data doesn't yet capture the full impact. To put today's trends in context, I'll compare inflation and affordability across similar windows: the six years between the 1973 and 1979 oil crises, and the six years between the 2020 pandemic and today's energy shock.
Transportation
One of the most immediate impacts of any sudden spike in oil prices is a spike in gas prices. According to the Department of Energy, gas prices averaged $0.67/gallon in 1978. After the 1979 revolution, prices nearly doubled to $1.25 by 1980 and continued climbing from there. After adjusting for inflation, that's equivalent to a jump from $3.54 to $5.31.
Today, we've been fortunate with gas prices prior to this recent spike. After peaking at $5 per gallon in the summer of 2022, they've been falling rapidly in the years since, hitting $2.77 in January.
When the conflict with Iran began in February, however, the price at the pump shot up in a matter of weeks, reaching $4.12 by April. That's a nearly 50% increase between February and April.
Just about every aspect of transportation got more expensive as well. From January 2020 to January 2026, car insurance premiums rose about 28%. That stings, but not as much as the 71% surge between 1973 and 1980.
A new car, on the other hand, is significantly less affordable today than it was in the 1970s. The average price ticked above $50,000 for the first time a few months ago and sits at $51,440 as of February, according to a Kelley Blue Book report.
While it's hard to find historical data showing the industry-wide average price of a new car, we can compare today's costs by looking at a model that's been around since the 1970s, the Honda Civic.
In 1972, the very first Honda 600 had a Manufacturer's Suggested Retail Price (MSRP) of $1,415 (about $11,280 in today's dollars). By 1979, a new Honda Civic was priced at $3,649, a 157% increase over the 1972 model. But that's still just $17,260 in today's dollars.
Today, a 2026 Honda Civic with the lowest cost trim available has an MSRP starting at $24,695. That's 43% more expensive than the same car in 1979, when comparing inflation-adjusted prices.
Overall verdict: The speed of inflation when it comes to gas prices and other costs was more rapid in the 1970s. But, when you factor in the cumulative inflation between the 1970s and today, transportation is less affordable today than it was decades ago.
Housing
Another ripple effect of rising oil prices is rising energy prices. In March, the energy index rose 10.9% in a single month, bringing prices up 12.5% year-over-year.
That's not quite as bad as the 1979 oil crisis, when electricity rates spiked 17% by 1980 and natural gas prices shot up 44% between 1978 and 1980, according to the U.S. Energy Information Administration. But we might still have more rate hikes in store for us — though not all related to oil prices.
That 12.5% year-over-year spike comes on top of already inflated energy rates. Since 2020, the average cost of electricity has gone up 25% while natural gas rates surged 42%. This month alone, electricity and natural gas jumped another 6.1% and 6.4%, respectively.
Things get even more expensive when you factor home prices and mortgage rates.
In 1973, Americans could expect to pay a median price of $32,500 to buy a house (about $247,850 today). By 1979, home prices had nearly doubled to $62,900 ($297,570 today).
Between 2020 and 2025, meanwhile, the median home price jumped from $330,900 to $419,200. That's about a 27% price increase, which is definitely a more modest jump from 1973 to 1979. However, when adjusting for inflation, today's homes are roughly over 40% more expensive than they were in 1979.
Mortgage rates complicate the picture. In the 1970s, mortgage rates shot through the roof, jumping from 7.44% in 1973 to 12.85% by the end of 1979.
Mortgage rates technically rose faster between 2020 and 2025, experiencing a 133% increase. But they rose from historic lows of 2.66% in December 2020 to 6.21% by December 2025.
Let's say you're a typical homeowner buying a house with a 20% down payment in each year to get a sense of how home prices and mortgage rates impacted your wallet:
Year | Home Price | Down Payment (20%) | Interest Rate | Monthly Payment |
|---|---|---|---|---|
1973 | $32,500 | $6,500 ($50,384 today) | 7.44% | $181 ($1,403 today) |
1979 | $62,900 | $12,580 ($60,821 today) | 12.85% | $551 ($2,664 today) |
2020 | $330,900 | $66,180 | 2.66% | $1,068 |
2025 | $419,200 | $83,840 | 6.21% | $2,056 |
When factoring in interest rates (and adjusting for inflation), 1979 homebuyers had the most expensive mortgage payments, but today's averages are a close second.
Overall verdict: The shift in home affordability looks similar between the 1970s and today’s post-pandemic economy. In both periods, saving for a 20% down payment became more difficult, and the monthly mortgage payment that followed took a bigger bite out of household budgets. Energy costs are also rising again, putting utility bills on a path that could mirror the spikes homeowners faced in the 1970s.
Food
In March, overall food prices were flat month over month and up only 2.7% year over year. Food at home prices actually fell by 0.2% between February and March and are up only 1.9% since last year.
That modest dip isn't enough to translate to major relief for consumers yet. Between 2020 and 2026, overall food prices have surged 32%. So there's a long way to go before food starts to feel affordable again.
Whether or not they remain on that downward trend is up in the air, though. The downstream effect of rising oil prices will also lead to higher costs for food producers in the form of rising fertilizer prices, higher costs for transportation and other operational expenses that are vulnerable to shifting energy prices.
The situation was even more grim in the 1970s. Between the oil embargo in 1973 and the Iranian Revolution at the end of 1979, overall food prices soared 89% for consumers.
Overall verdict: Food prices definitely rose faster in the 1970s than they did today. But the full impact of this recent Iran conflict is still yet to be felt. While we may not see double digit food inflation again, the conflict will likely reverse the downward trend we started to see in March.
Salaries
While costs generally soared faster in the 1970s than they have today, so did salaries. Between 1973 and 1979, the median household income grew 56%, rising from $10,510 to $16,460.
When you adjust for inflation, however, the typical household's buying power actually fell by 2.8%. That $10,510 salary in 1973 is equivalent to $80,151 today. Jump to 1979, and that $16,460 salary is only worth $77,870 today.
Today's households have also seen a decrease in buying power despite nominal increases in wages. In 2020, the median household income was $68,010 (equivalent to $87,055 today). In 2024, the most recent year for which data is available, median income rose to $83,730. When adjusting for inflation, that's a 3.8% decrease in buying power.
As a point of reference, compare those salaries to the typical mortgage payments mentioned in the housing section above.
In 1973, a $181 mortgage payment would have taken just 20% of your gross salary. By 1979, a typical $551 monthly mortgage payment would have already eaten up 40% of your gross salary.
In 2020, a $1,068 mortgage payment would have taken up just 18% of a typical household's gross income. By 2025, the typical $2,056 mortgage payment would account for nearly 30% of a household budget.
Overall verdict: Just like in the 1970s, Americans today are seeing paychecks rise on paper. But they're not growing fast enough to keep up with inflation. In fact, even though inflation was rising faster in the 1970s, the typical household's buying power wasn't falling as fast then as it's falling now.
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