Ronald Reagan's decision to lift domestic petroleum price and allocation controls marked a pivotal moment in U.S. economic policy during the early 1980s. This action occurred in the context of an energy crisis that had gripped the nation in 1979, causing widespread gasoline shortages, long lines at service stations, and soaring prices. The oil crisis was largely triggered by geopolitical tensions and shifts in supply dynamics, particularly following the Iranian Revolution, which disrupted oil exports. Recognizing the need for a shift in strategy, Reagan's administration aimed to stimulate competition in the energy sector by allowing market mechanisms to play a more significant role in determining prices.

The deregulation, implemented by the Department of Energy, removed the controls that had been established during the crisis, which had included price ceilings and allocation systems. This policy reversal was part of Reagan's broader economic agenda known as "Reaganomics," which sought to reduce government intervention in the economy, cut taxes, and reduce regulation. While the immediate aftermath saw fluctuations in gas prices and the emergence of an oil glut, the long-term impact also included a shift towards deregulating other industries and energizing domestic production.

In the years following the deregulation, the oil market experienced significant changes, including price volatility and an eventual downturn in oil prices due to oversupply. As producers sought to maximize profits in a deregulated environment, overproduction became common, leading to the oil glut of the mid-1980s. This situation resulted in profound economic ramifications, particularly for oil-dependent regions and economies, but also laid the groundwork for a more competitive energy market in the United States.