This ignored the fact that much of our industrial activity, indeed much of our society, was based on an assumption of perpetually cheap energy. The monetary authorities of the day reacted to the oil-price shock by accommodating the price increase. Viewing the higher prices as contractionary, they loosened monetary policy to avoid a slowdown.
The absence of an explicit nominal anchor for policy made this decision easier and its consequences far worse. As we know now, the assumed excess supply was illusory. The fallout from these errors in monetary and fiscal policy was severe. The global recession of 1981-82 was, in large measure, the end result.