October 16, 2013 | 7
So you think President Barack Obama’s calls for energy independence have seemed a bit starry-eyed? Well, every U.S. president since Richard Nixon has publicly called for the country to become self-sufficient. Why? Because of oil. Specifically, oil imported from Middle Eastern nations of the Organization of the Petroleum Exporting Countries (OPEC).
The ongoing chorus stems from a shocking event in October 1973 that remains large in the mind of anyone who was alive then: the Arab Oil Embargo. Yet America may only now be heeding the embargo’s lesson. The U.S. still gets about the same amount of energy from oil as it did 40 years ago, but imported crude may finally be doomed because of a steep increase in domestic production of oil and natural gas, courtesy of hydraulic fracturing. Yes, fracking.
Quickly, here’s how the embargo popped, according to a Wikipedia timeline that has been thoroughly vetted:
Oct. 16, 1973 – Saudi Arabia, Iran, Iraq, Abu Dhabi, Kuwait and Qatar unilaterally raise oil export prices by 17 percent, to $3.65 per barrel, and announce production cuts.
Oct. 17 – Arab oil ministers within OPEC agree to use oil as a weapon to influence the West’s support of Israel in the Yom Kippur war.
Oct. 19 – President Richard Nixon asks Congress to appropriate $2.2 billion in emergency aid to Israel. Libya immediately proclaims an embargo on oil exports to the U.S. Saudi Arabia and other Arab oil producing states follow suit the next day.
Oct. 26 – The Yom Kippur War ends.
Nov. 5 – Arab producers announce a 25 percent output cut.
As a result of the turmoil, on Feb. 11, 1974, Nixon and U.S. Secretary of State Henry Kissinger unveiled Project Independence, a plan to make the nation energy self-sufficient by 1980, primarily by improving energy efficiency and increasing use of “alternative energy sources” such as hydroelectricity. But the enthusiasm faded as prices slowly eased. In 1979, when a second oil crisis occurred, President Jimmy Carter again called for efficiency improvements, conservation and alternative energy, but subsequent action also waned.
The same cycle has occurred again and again: rising energy costs in the mid-1980s, which did lead to tougher Corporate Average Fuel Economy (CAFÉ) standards to improve the gas mileage of cars but didn’t reduce dependence on foreign oil; after the early 1990s recession and the Gulf War in the Middle East (driven by our oil dependence there); and even in 2008, when gasoline prices soared to $4 a gallon, crude hit $140 a barrel, and every company and media outlet touted “green” everything to solve America’s energy woes.
The net effect? In 1973 the U.S. consumed 34.8 quadrillion Btus of oil energy, and in 2013 it is projected to consumer 34.2 quadrillion Btus, according to the U.S. Energy Information Administration (EIA). Although oil burned at power plants has dropped to less than 10 percent of what was used in 1973, demand grew during the four decades since, driven by many, many more vehicles. Oil’s share of the nation’s overall energy mix had dropped from 46 percent to 36 percent, but net imports (imports minus exports) are still substantial: they were 30 percent in 1973, rose to a high of 60 percent in 2005, and quickly came down to about 40 percent in 2012. The recent drop has mostly be due to more domestic production of oil thanks to hydraulic fracturing, and more replacement of oil for power and heating by natural gas, also booming because of fracking.
Unlike past attempts to get off foreign oil, the current push might actually succeed, according to Jack Rafuse, principal of Rafuse Consulting in Washington, D.C., who was the White House Energy Adviser to Nixon during the 1973 embargo. “We really are in a different position to finally break the cycle, because of the rapid increase in shale oil and shale gas.” That is, fracking unconventional deposits of both fossil fuels.
Oil demand has decreased across the past five years because of the new wave of steep CAFÉ increases put into effect by the Obama Administration. Under the regulations, gas mileage will continue to rise significantly through 2025. Furthermore, natural gas should continue to replace oil in power plants and home heating, while oil fuels transportation. Indeed, the EIA has stated that shale gas and shale oil could make the U.S. energy independent by 2030. This time, Rafuse says, the driver is supply and demand economics, not policy or presidential decrees. The one political move that would help the changeover, he notes, “is an end to bans like the one New York State has on fracking.” Needless to say, environmental concerns may not provide such smooth sailing.
The U.S. has never experienced such a large and immediate cutoff in foreign oil supply as it did in 1973, and has never seen as much consumer chaos and long gasoline lines as it did after the second crisis in 1979. But the attempts to wean the country off imported oil have never stuck. Maybe the current trend will. Given that, improvements in energy efficiency might be the greatest legacy of the 1973 embargo. According to Sun Day Campaign, a research and educational organization that promotes sustainable energy, U.S. energy consumption has increased by 28 percent, from 75.6 quads in 1973 to about 97 quads in 2013, yet population grew by 50 percent and the nation’s gross domestic product grew more than 250 percent. In a press release, Sun attributes the greater leverage to legislation, regulations and technological advances related to energy efficiency, as well as consumer efforts to conserve.
So at least we learned something.
Image credit: © Henrik Jonsson Graphic Design