Could the US Be Barreling Toward Another Oil Crisis?
More than 45 years after the 1973 oil crisis, the U.S. oil supply has—and hasn’t—changed.
America is the land of plenty. We don’t expect shortages, particularly involving stuff we actually need. Which may be why we were so shaken by the gas shortage of 1973. Drivers suddenly had to wait to fill up. For hours. Decades later, Daniel Jack Chasan reminisced about experience in the Seattle Times: “You would rise before dawn; climb into a cold car; drive, slowly, to a gas station with windows unlighted and pumps still locked; get in line behind the people who had left home even earlier; turn off the engine to save gas; pull your jacket up around your neck; settle down and wait until somebody arrived to turn on the lights, unlock the pumps and maybe let you buy a little gas.” These lines could be truly morale crushing—measurable not in blocks, but in miles.
Beyond this, drivers paid for the privilege of waiting, as consumers saw the average retail price of a gallon of gas soar from 38 cents to 84. Which was to be expected—the price of oil per barrel had quadrupled in a year. And while, looking back from today, 84-cent gas does make one want to roll out the Humvee, the cost of gas back then was equivalent to $4.78 in 2019 dollars.
It was all triggered by events that happened thousands of miles away. 1973’s Arab-Israeli War (Yom Kippur War) only lasted from October 6th to October 25th, but its impact on the American driver stretched into the next year. Arab members of the Organization of Petroleum Exporting Countries (OPEC) embargoed the U.S. for supporting Israel and continued to do so until March 18, 1974.
Just when the U.S. was started to block out that memory, crisis came again in 1979. (This time it was a combination of OPEC member states raising their prices coupled with a disruption of the Iranian oil supply.) Scroll to 2:30 to start hearing from embittered motorists.
Today, of course, the thought of sitting for hours at a gas station sounds more like a cut scene from Mad Max than anything Americans would experience all across the country at their local Chevrons. Are those shortages permanently in the past? While there is still real cause for concern, a number of changes have put the U.S. in a position where we’re less likely to be prostrate at the pumps.
We’ll start with what’s stayed the same. In short: The two underlying issues that caused 1973 to get so crazy remain.
We Don’t Produce What We Use. In 2008, the U.S. was producing five million barrels of oil per day. By 2017, that total had surged to over nine million barrels per day. The growth was so significant that President Obama lifted the ban on crude exports in 2015. Indeed, we now have weeks when our country exports more than we import. And the Energy Information Administration projects that domestic oil production is on pace to crack 13 million barrels per day by 2020.
But before you go and buy the bulkiest Buick available, take note that the U.S. consumed more than 20 million barrels per day in 2018. Increased production aside, if we were forced to rely exclusively on our own supply, we’d have a problem. Building on that…
The Countries Who Own the Oil Remain Ominous. These are the top five nations in terms of oil reserves: Venezuela, Saudi Arabia, Canada, Iran, Iraq. Of that quintet, it’s fair to say we have a complicated relationship with four of them. (We’ve even had some recent tensions with Canada, as President Trump enraged our northern neighbor by tweeting Prime Minister Trudeau was “dishonest and weak” following the G-7 summit.)
Here’s how things have changed.
We Now Have a Reserve. As the U.S. Department of Energy notes, the Strategic Petroleum Reserve is the “world’s largest supply of emergency crude oil.” Established in 1975, it received its first delivery in 1977. The crude oil is stored in underground salt caverns in a government complex along the Texas and Louisiana Gulf Coast. The current reserve is 254.6 million barrels of “sweet” (with low sulfur content, making it more desirable) and 394.5 million barrels of “sour” (with higher sulfur content).
It’s an impressive sum, though it grows less so when you do the math. If we reach 13 million barrels produced a day and keep it all for ourselves, we’d still need another seven million barrels to keep pace with our needs. And when you take those 649.1 million Strategic Petroleum Reserve barrels and divide them by the seven million barrel daily shortage, it all adds up to just over 90 days. But it can be argued those three months will suffice because…
We Might Only Need to Stall, Not Find a Permanent Solution. The Department of Energy notes the Reserve’s “formidable size” makes it likely to cause hesitation among those looking to impose “oil import cutoffs.” After all, when oil suppliers don’t sell to us, they stop themselves from making money. Why would they hurt themselves when we can initially minimize our pain?
Plus while a lot of oil-endowed places don’t have great relations with us…
Oil-Rich Countries Often Don’t Get Along With Each Other Either. In particular, Iran and Saudi Arabia have a relationship that, on a good day, is a heated rivalry. For any one of them to count on the others to honor an embargo long enough to make Americans experience gas lines again would be a leap of faith few of these nations seem likely to take.
And it should be noted that while America still uses a lot of gas, we’re not the same nation we were in the ’70s.
Shocked into a Switch. In 1983, the New York Times ran an article titled “American Way of Life Altered by Fuel Crisis.” In it, the story noted: “Homes are now cooler in winter and warmer in summer. Many families skip pleasure trips. They squeeze into compact cars and tool along at 55 miles an hour or something like that. Like pioneers, lots of people harvest their own food in backyard gardens.”
In particular, there was a focus on improving fuel efficiency. Consumers were obviously receptive and Congress imposed Corporate Average Fuel Economy (CAFE) Standards in 1975 to ensure these vehicles would actually make it to market. The U.S. quickly saw a jump from 13.5 to 27 miles per gallon. If a gas shortage somehow broke out today, there would likely be fewer cars lined up simply because we don’t need to fill up as frequently. Not to mention some automakers are working to make gas mileage completely irrelevant by embracing electric cars.
And then there are those who don’t want to get behind the wheel at all.
No Longer All About Autos. Robert A. Caro’s 1974 classic biography The Power Broker tracks the life of Robert Moses, the longtime New York public official and “master builder” who oversaw countless construction projects. Moses was a fervent believer in the utility of cars. Caro notes Moses happily displaced hundreds of thousands of people to build highways and wanted to construct even more of them, most infamously a proposed expressway through Manhattan’s Greenwich Village. Caro even accuses Moses of deliberately building low bridges on the Long Island Parkway to keep buses from using it. Looking back, these policies strike most New Yorkers as utter madness. Why would anyone do their best to force people to drive? This is particularly true among car owners—no driver has ever been stuck in the middle of rush hour, looked around, and thought, I wish there were more of us.
Today, there are plenty of ways to get around without a ride of your own. Is it a relatively short journey? How about a bike share? If it’s more distant, why not Lyft? Or car share, so you’ll have access to a car for you personally, but only on the few occasions you actually need it. Or just explore the public transportation options.
Obviously, these options are more readily accessible in some places than others. But you know what would ensure their availability grew far more swiftly? A sudden spike in oil prices, coupled with each visit to the gas station becoming a nightmarishly time-consuming task. For, you see…
An Oil Crisis Today Would Ultimately Hurt Oil Suppliers. When it becomes prohibitively expensive or simply impossible to get enough oil, suddenly you take a hard look at your options. The crisis of 1973 got the U.S. and much of the world thinking about alternative energy. Suddenly fuel efficiency wasn’t about saving consumers some money and making the air a little cleaner—it became a matter of national security. This is the strongest argument for nations never again imposing an oil embargo on the U.S.: The last time they did it, they made us realize maybe we don’t have to be so dependent on the stuff, after all.