Posted on 10/20/2013 11:29:08 AM PDT by Kaslin
October 17 was the fortieth anniversary of the oil embargo slapped on America by the Organization of Petroleum Exporting Countries (OPEC). That action changed the entire geopolitical map—taking the power from the United States and giving it to the Middle East. As a result of the embargo, the price of gasoline quadrupled, gas stations had multi-hour long lines, and the stock market plummeted—kicking off a serious recession.
My entire driving life has been impacted by OPEC’s actions. On October 17, 1973, I was 15—days away from turning 16. I got my driver’s license on my sixteenth birthday.
It was a different world prior to the embargo. America was the dominant player in the energy market—supplying 63 percent of the world’s oil at the beginning of World War II—and had surplus supply. The surplus neutered OPEC’s previous embargo attempts in 1956 and 1967, as the U.S. was able to fill the demand gap OPEC created.
It wasn’t the embargo itself that changed the dynamic, but the timing of it.
U.S. oil production peaked in 1970 and declined sharply in the subsequent years. When OPEC chose to use oil as a diplomatic weapon in 1973, America was no longer the swing producer with the ability to fill in the gaps. We’d become increasingly dependent on suppliers from the oil-rich Middle East. Scarcity was our reality.
To punish the U.S. for supporting Israel in the Yom Kippur War, OPEC banned oil exports to the U.S. and, eventually, other countries. OPEC then reduced production by 5 percent per month until the embargo ended in March of 1974.
For the past forty years, OPEC has controlled the geopolitical equation. Every president since Richard Nixon has urged the country to strive for energy independence so that we don’t face another energy crisis like 1973.
Remembering the embargo, Henry Kissinger, who was Secretary of State during the 1973 oil shock, said at a national summit on energy security: “You could not make plans in the Middle East or involving the Middle East, without keeping in mind the considerations of the oil market.”
While the social, political, and economic impacts of the embargo have been harsh, there’s also a silver lining: North American producers were forced to find new ways to explore for and produce hydrocarbons—and those technologies and techniques developed by individuals and industry have, once again, changed the geopolitical equation.
The 1973 OPEC oil embargo revealed a serious weakness in America’s energy and national security.
According to the Reuters story on the embargo’s anniversary: “The United States is less reliant each month on Middle East energy, thanks to increasing production of both oil and natural gas from technologies such as hydraulic fracturing, or fracking, which allows extraction of oil and gas from shale deposits.”
While the U.S. is less reliant on the Middle East due to the increasing production of our domestic resources—with our crude oil production up by 50 percent since 2008, it isn’t actually due to hydraulic fracturing, as Reuters states. According to Harold Hamm, who is credited with being one of the first wildcatters to take a chance on developing North Dakota’s Bakken field, saying that “fracking is the root of America’s new supplies of oil and gas” is a misconception that has “been erroneously driving public discourse and policy.” Hamm comments on the embargo’s anniversary in Forbes: “It’s also time for America to hear the truth about the real source of our modern-day oil and natural gas renaissance—horizontal drilling.” (The distinction is important, as fracking has been used by the environmental lobby to create fear, when in fact fracking has been consistently in use for more than 60 years.) Extolling how far America has come since the 1973 embargo, Hamm states: “Never again are we going to be held hostage and extorted.”
Hamm is correct. As the Wall Street Journal says, “greater U.S. oil production gives foreign-policy flexibility.” Likewise, Time Magazine affirms: “OPEC's influence has been diminished, and oil can no longer be used as a weapon the way it was 40 years ago.”
How does energy security give the U.S. “foreign-policy flexibility?” One example is Iran. Reuters reports: “Last year, Washington and its European allies orchestrated a partial boycott of Iranian oil, to compel Tehran to return to talks about its nuclear program. The sanctions against Iran took roughly 1 million barrels per day off world markets—without the price spikes many predicted.” Additionally, U.S. production has helped dampen price spikes from supply problems in Nigeria, Libya, and Sudan—and made us less vulnerable to Middle East oil shocks. Without the domestic supply, current gasoline prices would be higher, not lower.
While U.S. dependence on Middle Eastern oil has reversed course since 1973—increasing for thirty years and declining since 2008, we are surprisingly still importing the same percentage of oil that we did 40 years ago: 35 percent.
?We have come a long way, but there is still much that can be done to reduce use of Middle Eastern oil and improve our energy and national security—and that was the focus of the Oil Embargo +40conference held in Washington DC on October 16. The conference brought together iconic policymakers, leading CEOs, and senior military leaders to discuss the often overlooked threat of oil dependence and the solutions that are now within our reach. (Note: the conference website features an excellent “Forty Year Energy Security Timeline.”)
Sam Ori, Executive Vice President of Secure America’s Energy Future (SAFE), the non-partisan group aimed at reducing U.S. dependency and the organizer of the conference, told me that solutions generally fall into two categories: supply side and demand side.
The supply side is being secured by increasing U.S. oil-and-gas production—but we can do more. Some of the solutions addressed at the conference include calling on President Obama to finally approve the Keystone pipeline, accessing more federal lands, and accelerating approval for drilling permits. SAFE proposes that a portion of revenue generated from new drilling on federal lands should be invested in a research-and-development trust fund to help develop new technologies for using oil more efficiently. Such a trust fund could develop innovations without raising taxes and without government picking winners and losers, such as we’ve seen with Solyndra and the 50+ other green energy projects, which were funded through Obama’s 2009 stimulus bill and have already gone bankrupt or are circling the drain.
On the demand side, the experts recommend diversifying the transportation fleet by integrating natural gas and electricity. Ken Blackwell, a Senior Advisor to SAFE, explains: “electric vehicle technology is uniquely advantageous in the fight against OPEC, because electricity can come from multiple sources including coal, natural gas, and nuclear. Ohio coal should be burned to generate electricity used to power electric vehicles and, as a result, displace oil-based gasoline. We should invest in innovative research to foster oil displacement, not an environmentalist agenda.”
At the conference, Fred Smith, Chairman and CEO of FedEx, addressed the benefits of electric vehicles for short-haul, light-duty vehicles and natural gas for longer haul trucks and Dan Akerson, Chairman and CEO of General Motors, announced a new bi-fuel Chevrolet Impala that will use both conventional gasoline and compressed natural gas.
Robbie Diamond, founder, president and CEO of SAFE, concludes: “The domestic oil boom has already reaped tremendous benefits, but integrating natural gas and electricity into America’s transportation system is a necessary way to diminish both our dangerous reliance on a single commodity and our economic exposure to the global oil market.”
Could America still feel the shockwaves of supply disruptions caused by Middle Eastern instability? Yes, but we are far less vulnerable today than we were in 1973, as the geopolitical equation continues to evolve. A recent report from Citigroup points out that, by the end of the decade, the U.S. “could be freed from the shackles involved in sacrificing a values-driven policy focusing on human rights and democratic institutions in order to secure cooperation from resource-rich despotic regimes.”
Will I ever see $1 a gallon gasoline again? No. But, I am optimistic about America’s potential energy future (if the Obama Administration policies don’t impede its success), and I share Hamm’s enthusiasm: “Perhaps most significantly on the 40th anniversary of the OPEC Oil Embargo, U.S. gasoline prices are down despite an escalating crisis in the Middle East, and we are no longer beholden to go to war and sacrifice American lives to protect our oil interests.”
I remember thinking $10 to fill my tank. This is ridiculous.
I hope oil production in the US continues to increase. I look forward to the day that Arabs become irrelevant again. Without oil, the Arabs are NOTHING. They will fade away into the sand dunes and be quickly forgotten. And Islamic terrorism will become a thing of the past.
I remember filling up my ‘67 GTO for 5 dollars. Sigh.
Increased average mileage per gallon of our vehicle fleets has also had a tremendous impact on our oil consumption.
Ten bucks bought way more of everything back then.
I paid $3.09 yesterday...its been around 5 years since I saw that price. :)
I’ve read that Mexico has been particularly stupid about skimming oil profits into their general fund, and not allowing it to be used for new exploration...and their production is taking a steep dive. So our increased production is somewhat offset by Mexico’s decrease...somewhat leveling out the impact on our imports from the middle east.
When I first started driving gas in my area was 18.9 for regular. Gas wars would sometimes bring that down to 12.9.
OPEC’s best friend has been sitting in the Spite House for going on five years now. He’s keeping a lid on the Keystone Pipeline, which would break the fracking boom wide open over the heads of OPEC. As long as Obastard can keep the pipeline a mere dream, OPEC has leverage over us.
The Saudis, who are a long-thinking bunch, understand Obastard will be eventually replaced. Even a different Rat would probably allow he pipeline eventually. 20 years down the road, they will not have the power they do today, and are making preparations for it.
With every uptick in the price of gasoline and every story of an oilfield worker losing his job or of an oil company losing profit, I further despise Obama and his mission to destroy an industry and our economy.
OPEC may have seized American oil companies oil in the Middle East by nationalizing production and denying Americans of cheap gas made from what should be our oil, but Obama wants to eradicate our ability to be self sufficient.
It is time we took back our industry and freedom by beginning to drill in the USA and take back our production capabilities from OPEC.
There is also some bad news.
Although supply is plentiful, price, adjusted for inflation, is way up.
During the 1973-74 embargo, prices went up to about $40 a barrel adjusted for inflation.
Today, America pays around $100 a barrel, and Europe and Japan pay close to $110.
Obama is obsessed with enslaving America or keeping it to dumbed down slave status. He wants to outright hand over America.
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Any decrease from Mexico is offset by increase production from Canada. Canada has the third largest proven reserves in the world.
And as the Venezuelan Commies destroy their real economy the more dependent they become on oil exports.
Venezuela now has more proven oil reserves than Saudi Arabia.
“The domestic oil boom has already reaped tremendous benefits, but integrating natural gas and electricity into America’s transportation system is a necessary way to diminish both our dangerous reliance on a single commodity and our economic exposure to the global oil market.”
This is a reality many Conservatives don’t want to hear.
Many hear hoping for the failure of Tesla.
An American car company building the very best electric cars in the world in the United States. As GM and Ford hold steady with auto capacity in the USA while expanding in Mexico.
So do I. But I also remember when $5 filled up a tank on a big car. It’s more then ridiculous, It’s outrageous
I remember when I filled up our 1966 Impala Chevrolet for $5.00. It was the car I learned to drive in
Remember when gas was being rationed? We were stationed at Fort Riley during that time and we drove to Florida to visit my in-laws for Christmas. We had no problem getting gas until we got into Florida and had to fill up. We could fill up 5 gallons, but after that we could fill the tank completely when we needed it. The same was when went to return home. Before we exited Florida we could only put in 5 gallons of gas
The Keystone pipeline has nothing to do with the fracking boom. It would be used to transport oil produced from tar sands in Alberta, Canada. Due to the political delays in approving the pipeline, Canada has made a deal to supply China with some of the oil from those tar sands.
But will Venezuela’s reserves be fully developed? They’ve got a nasty habit of confiscating private equipment...so the development of their reserves will be heavily reliant on government sponsored drilling. That’s sort of why Mexico’s production is dropping steeply.
I’ve got no hope that Venezuela will be a long term player in weaning North America off of middle eastern oil. Canada - yes...but ‘Tar Sand’ oil is under political attack...time will tell if it lasts.
But hey, the more the better. I’m glad we’re increasing production. A few months ago, the Saudis started production at a shallow off-shore field, where they built artificial islands for their rigs. This is expensive, and they would have never done this, if it weren’t for North American competition. We are in a position where we can out-produce the Saudis, and the notion of a Saudi embargo becomes more laughable by the day. We’re pushing them in the opposite direction, and forcing them to increase production. That’s great.
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