The United States is fortunate in possessing many natural resources, including oil, natural gas and coal. In response to the express wish of the government of the United States to make maximum economic use of those resources, the energy sector sends out generous Freedom Checks (as Matt Badiali calls them) to everybody who helps them use their pipelines and refineries to bring energy to the businesses and individuals who need it. In the early 1980s some companies were structuring themselves as publicly traded partnerships. In 1987, Congress passed a law, Statute 26-F, modifying Section 7704 of the Internal Revenue Tax Code. That law defines publicly traded partnerships. It exempts them from owing federal income taxes so long as they pay at least 90% of their profits out to the unit holders in the partnership. This is why Freedom Check payments are so much larger than dividends from corporations. Corporation must pay taxes before they pay out dividends to shareholders. Read more about Freedom Checks at banyanhill.com.
Also, these publicly traded partnerships, also called master limited partnerships, must also be in the business of energy and minerals. Most of them operate pipelines in North America. Therefore, they enable the companies that explore for oil and produce it through wells to transport the oil to refineries. Congress wanted to encourage the development of America’s energy sector.
The people and businesses of the United States had no problem obtaining the energy they needed, and so had no Freedom Checks, until October 1973. In that year, the countries of the Organization of Arab Petroleum Exporting Countries decided to punish the countries that supported Israel during the Yom Kippur War. They did this by declaring an oil embargo on the United States, Japan, The Netherlands, Canada and the United Kingdom. At the beginning of this embargo, the international cost per barrel of oil was $3. By the end of the embargo in March 174, it had risen to $12. Read this article at Money Morning.
During this period, the price per gallon in the United States rose to over one dollar. Also, shortages of gas led to many long lines, with people often waiting half an hour or longer to reach the pumps. In some areas, various forms of rationing were implemented, such as the odd/even system. On certain days of the week, only cars with odd numbered license plates could buy gas. Every other day, it was cars with even numbered license plates.
President Nixon pledged to reduce the country’s dependence on foreign oil, but the Freedom Check law was not passed until President Reagan’s second term.