We've Come a Long Way, Baby, from OPEC Oil Embargo of 1973
Around the State
Forty years ago today, in response to U.S. support of Israel in the October war, Arab members of the crude cartel OPEC launched an oil embargo that set America on the slow, painful road toward energy independence.
Michael Levi -- author, fellow at the Council on Foreign Relations and keynote speaker on the final day of the 2013 Florida Energy Summit -- used the drama of the embargo's anniversary to bring home how far the country's energy policy has come and how far it still has to go.
Over the next five years, crude imports nearly doubled, as the U.S. became increasingly dependent on suppliers in the oil-rich states of the Middle East. When those providers decided to turn off the taps, oil prices in the U.S. quadrupled.
America's emergence from foreign oil oppression was a long, slow haul until a revoluion within the industry that began during the last decade, Levi said.
That revolution -- mostly thanks to fracking opening up shale oil fields in Texas and North Dakota, as well as efficiency measures that have oil demand in the U.S. plateauing -- is remaking the global oil markets, putting pressure on OPEC and other traditional producers.
The International Energy Agency (IEA) estimates that non-OPEC oil producers -- led by the U.S., Canada and Kazakhstan, which has said it plans to raise oil production to over 2 million barrels a day by 2025 -- will increase global supplies by a near-record 1.7 million barrels a day to 56.4 million, reducing the amount of oil the world needs from OPEC.
OPEC’s share of global oil production has fallen from a peak of 52 percent in 1973 to 43 percent, a share that seems likely to continue falling.
Things have even shifted on the customer side: Levi said that last month China became the world’s biggest oil importer, passing the U.S. That shift will continue, with Asian countries projected to increase net imports of crude and refined products by more than 10 million barrels a day by 2035.
But, Levi said, those who look to put all their eggs in one basket are wrong. Natural gas is a strength for America. But it still needs oil production and likely will for the foreseeable future.
Those who preach doom and gloom for the renewables industry are wrong, too, he said. "Wind and solar power doubled; in fact, renewables had investments topping $50 million in 2011."
Where we fall short," he said, "is still in energy independence and climate change. We need to continue to use less oil, drive increasingly more fuel-economic cars."
Levi asks, "Did you know Toyota's hybrid electric car Prius is the third largest-selling car in the world? ... Reduced consumption is how we become energy independent and how we keep carbon dioxide out of the atmosphere," answering the call to halt climate change.
Levi said what he worries most about going forward aren't the regulations imposed on the energy industry, particularly the natural gas industry. It's that we won't set our standards high enough.
"People are rightly worried about fracking fluids getting into their wells. They're concerned about toxic wastewater. What I want to see," he said, "is the industry saying it wants tougher rules because it can handle them. That's how to win confidence."
We need everyone working together for scientific, not political solutions, he said.
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