The Crude Oil Windfall Profits Tax Act, signed by President Jimmy Carter, was a legislative response to the economic turmoil resulting from the 1979 energy crisis. In the wake of the Iranian Revolution, oil prices surged dramatically, leaving American consumers grappling with record-high gasoline prices. This situation exacerbated inflation and contributed to an ongoing recession, prompting the federal government to act. The legislation imposed a tax on the excessive profits earned by domestic oil companies, designed to target profits accrued from the elevated market conditions created by the energy crisis.

The act represented a significant shift in energy policy, reflecting growing public frustration regarding oil price hikes and the monopolistic practices of oil corporations. The intention behind the law was twofold: to curtail inflationary pressures by taxing windfall profits and to provide funding for programs to alleviate the economic strain on American families. The revenue generated from the tax was earmarked to help finance energy conservation initiatives and stimulate alternative energy sources.

Opposition to the tax included various stakeholders, such as oil companies and some members of Congress, who argued that the tax would stifle investment in energy production and lead to further price increases. Nevertheless, the legislation passed, underscoring the administration's commitment to addressing energy concerns and the economic plight of citizens during a particularly challenging time. Ultimately, the tax played a role in shaping U.S. energy policies moving forward, creating a precedent for government intervention in the energy sector.