Posted on 04/09/2022 9:55:59 AM PDT by blam
◾When Middle Eastern oil producers declared an oil embargo on exports to the U.S. in 1973, oil prices soared and the U.S. experienced significant fuel shortages.
◾Today’s energy crisis, which includes not only oil but also natural gas and coal, could be even worse than the infamous oil crisis of the 1970s.
◾The current energy crisis could soon be made worse as the EU moves to ban Russian coal and the U.S. struggles to meet its LNG commitments.
In 1973, after the Yom Kippur war between Israel and a coalition of Arab countries, Middle Eastern oil producers declared an embargo on oil exports to the United States as punishment for its support of Israel. What followed was an energy crisis of epic proportions. According to Daniel Yergin, the current energy crisis could be worse.
In the 1970s oil crisis, the price of oil soared fourfold over three months following the embargo. At the time, the United States had thought that the lost market share would hurt the producer states financially. But instead, those producers made up for that market share loss with considerably higher prices.
Consumers in the United States, however, suffered a severe blow in the form of fuel shortages and urgent energy conservation measures as the country’s consumption of oil had been growing incessantly for decades thanks to the cheap Middle Eastern oil.
Interestingly, although the embargo did not involve Europe, the continent suffered an even more severe blow because of the way prices rose following the Arab producers’ move. Fuel rationing was put in place and national speed limits were introduced to conserve fuel.
The latter measure, about speed limits, may sound familiar to those following the International Energy Agency’s recommendations for energy conservation: it is one of the ten steps the IEA listed as necessary to reduce the EU’s reliance on Russian fossil fuels.
The fact that today’s shortage involves all the fossil fuels rather than just oil is one of the reasons this crisis could be worse than the one in the 1970s, according to Yergin, who made his comments in an interview with Bloomberg this week.
“I think this is potentially worse,” the expert told Bloomberg.
“It involves oil, natural gas, and coal, and it involves two countries that happen to be nuclear superpowers.”
Leaving aside the understandable unease that the latter part of the statement would spark in anyone in Europe or North America, the first one is telling. Europe depends on Russia for close to half of its coal and natural gas imports and about a quarter of its crude oil imports. And the EU just decided to ban Russian coal imports in an attempt to hurt the Russian economy as punishment for Russia’s actions in Ukraine.
Here’s what happened after the announcement of the ban, which has yet to be approved, by the way. Indonesia hiked its own coal prices by 42 percent, Australian coal miners reported they have limited ability to replace Russian coal, and Asian coal prices soared amid reports that European buyers were hunting for replacement coal.
What’s happening in coal is pretty much what will be happening in oil and gas. As Yergin noted in his interview with Bloomberg, the global natural gas market is already quite tight, and there is no ready replacement for Russian gas should it stop flowing. That’s despite efforts on the part of U.S. LNG producers to boost exports.
Another energy expert, David Blackmon, went a step further this week on the Energy Transition podcast, saying that the U.S. did not have the physical means to fulfill the promise President Biden made to the EU of supplying an additional 15 billion cubic meters of gas in the form of LNG. Blackmon noted the time it takes to boost gas production and expand liquefaction capacity as well as the limited LNG tanker fleet and already existing LNG export commitments to other buyers.
In this environment of tight fossil fuel supply and demand that seems to significantly exceed this supply, things are already critical without any oil or gas embargos, which a senior EU official mentioned might become “necessary” at some point. The cost of living is rising across the continent, and governments are struggling to rein it in. If the EU goes down the embargo road the results could be disastrous, as virtually every analyst has been warning for weeks.
Actually, it’s the same.
The ‘crisis’ in ‘73 was manufactured since the Arab embargo was in retaliation for Nixon siding with Israel in the Yom Kippur war.
There was never any shortage. In fact, the storage tanks in Oklahoma were bulging with excess oil, which they made millions and millions off of when the prices went from 25c to 50c. And stayed there until the next manufactured ‘crisis’ in May of ‘79, when the Iranian revolution provided the distributors yet another chance to pull the same stunt.
What’s different this time is that it is the American GOVERNMENT - the INSTALLED government - that artificially constricted supply. In ‘79, as now, the actual supply restriction was tiny - Iran was only 1-3% of world oil. But that was an excuse to double the price based on...fear.
So it’s the same scam, only this time it’s being done to us by the SOB’s who stole the election and swore themselves in.
Carter’s induced crisis.
I am not yet seeing gas station lines a mile long or circling entire city blocks waiting for a ration of gasoline. Let me know when that happens and I will concede today’s shortage is as bad as the 1970s. I am not saying it can’t happen. I am just saying it was worse in the 1970s than it currently is today. That may well change.
VIDEO President Jimmy Carter - Address to the Nation on Energy April 18th, 1977
https://rumble.com/vl5sdc-president-jimmy-carter-address-to-the-nation-on-energy-april-18th-1977.html?mref=71v3&mrefc=25
No thanks. Just had b’fast and thinking about lunch and supper.
“Iran was only 1-3% of world oil. But that was an excuse to double the price based on...fear.”
Welcome to the world of inelastic goods. Where a 2% decrease in supply can lead to a doubling in price.
The good is that since 1970 we have become less dependent on oil, especially foreign oil.
Yes, because it was caused by the person who was in our White House on his first day as (P)resident, Joe Biden.
No other president that I know of would ever have caused this
They did something....froze the price?
I agree about the gas lines, but this time we also have food shortages.
“Welcome to the world of inelastic goods. Where a 2% decrease in supply can lead to a doubling in price.”
Good comment.
While I agree that today’s oil is not that inelastic, there are some other critical raw/manufactured goods that do meet that criteria.
We are about to find out what they are—the hard way.
If you have energy but don’t use it is that really an “energy crisis”?
If you have energy but don’t use it is that really an “energy crisis”?
Only in that there’s twice as many people so it hits more lives.
Right. These hair-on-fire drama queens just never stop with this stuff.
Shortages of damn near everything. Ram 5500 steer linkage is back ordered until august, from today. Last time I bought that (2020) I had it in a week. New truck shortage, used truck shortage, chip shortages. Had to drive back to CA from Florida with a used truck. Having issues sourcing various automotive fluids as well. My O’rielly’s oil shelf is half empty, and they have no ATF currently.
Actually it is worse. Why is a man suffering from dementia allowed to lead a country from oil independence to $5+ heating oil and $7-$10 gasoline per gallon in little more than a year in office?
We must all be crazy to let this babbling idiot remain in office.
They were both planned well ahead of time.
Only because it’s our government doing it to us.
Ping
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.