The economy and the energy crisis. The economy remained the country's main domestic issue. Carter reversed Ford's policy of dealing with the inflation side of stagflation by first attacking high unemployment. Carter found, as his predecessors had, that there was a serious cost for increasing spending on public works to provide jobs — inflation soared. In fact, during his four years in office, inflation doubled in part because of a new round of oil price increases by OPEC and also because using interest rates to moderate the problem was not effective. Interest rates were so high that both new home construction and the sale of older houses dropped sharply.
Even before oil prices went up for the second time in the decade, the United States was in the midst of a major energy crisis. In the spring of 1977, the president submitted a comprehensive package of energy legislation to Congress that included the creation of the Department of Energy, the use of higher taxes and tax incentives to encourage conservation, the development of new sources of oil and natural gas, and the promotion of alternative fuels and nuclear power. Only the Department of Energy was approved; furthermore, an accident at the Three Mile Island nuclear plant in March 1979 discredited nuclear energy in the United States. OPEC price increases in 1979 raised the cost of a barrel of crude to over $30 (compared to $3 dollars in 1973) and resulted in gasoline price hikes to more than a $1 a gallon (as opposed to 40 cents in 1973) and the return of long lines at the gas pumps.
