Natural resources that our nation relies heavily upon such as oil, petroleum and natural gas are fossil fuels, which means that they will eventually cease to exist. This gives nations that have an abundance of these natural resources much economic and political power. The thought of this supply ending also causes a search for renewable resources that would never cease to exist. Petroleum or “black gold” provides the world with nearly half the energy used. (10, 330) 660 billion barrels or 67% of the world’s oil reserves are found in the Middle East. Saudi Arabia alone has 258 billion of these barrels which is one fourth of the world’s oil. One tenth of the world’s oil is found in Abu Dhabi, Iran, Iraq, and Kuwait. (10,332) Compared with this extensive supply, the U.S. and Canada have only 3% or 32 billion barrels of the world’s reserves. (10,333) Despite this, the U.S. and Canada consume more than four times the amount of petroleum than the Middle East. The Middle East produced 19.8 million barrels and only consumed 4.8 billion barrels according to 1994 figures. The U.S. and Canada produced only 8.5 million barrels and consumed a whopping 19.4 million barrels. (10,334) Today it is hard to imagine relying solely on ourselves, for our energy needs. The U.S. used to provide for themselves, but consumption grew too rapidly for the small supply it possessed. As the U.S. began to rely heavily on imported oil from other countries, power struggle emerged between the producers and consumers of this oil.
The increase of oil imports became the number one concern in America when Richard Nixon became president in 1969. A Cabinet Task Force on oil Import control was established and was led by George Shultz the Labor Secretary. (13, 589) He recommended doing away with quotas, having no minimum of oil that the U.S. has to buy from foreign producers, but Nixon strongly disagreed. Nixon believed that this would only increase imports and be a threat to domestic industry, and he decided to keep the quotas. (13, 589) This was obviously not in the interest of Middle Eastern countries and the Shah of Iran quickly wrote to President Nixon. He explained that only if the quotas were dropped could the stability of their country be ensured and they could sell larger volumes of oil to the U.S. Nixon however, did not agree to drop the quotas. (13,589) The problem with oil imports came to head during the 1969-1970 winter which was the coldest in 30 years and power was randomly turned off to preserve energy which caused brownouts along the Atlantic Coast. (13,590) Nixon put price controls on oil consumption and discouraged domestic oil in 1971. (13,590) These artificially low prices however could not keep up with the changing market. If prices were low, there was little incentive for conservation of energy or for new exploration for oil reserves. (13, 590) Money was not coming in and some drilling was even ended prematurely. This attempt at federal energy regulation was a failure. (3, 338)
To work on the energy crisis, Nixon assigned James Akins to the White House. He was the State Department chief oil expert and even before the crisis was at its worst in 1973 he suggested we reduce consumption, increase domestic production and only import from “secure sources”. In April 1973 Akins published some of his ideas in Foreign Affairs in an article entitled “The Oil Crisis: This Time the Wolf Is Here.” He was comparing the oil crisis with the Middle East to a ferocious wolf ready to attack. The wolf had certainly arrived and that same year Nixon did away with quotas because America’s demand for oil was too high for domestic production to keep up with it. For the first time, the U.S. was vulnerable and not able to supply it’s allies in the event of a crisis. (13, 591)
The wolf was at full attack in the fall of 1973 when the Yom Kippur War sent gasoline prices soaring in America. The same thing happened in 1979 when the Shah of Iran fell from power. (13, 512L) In the Middle East the Arab- Israeli wars of 1967 and 1973 greatly affected the flow of oil throughout the world as they reduced or cut off their petroleum exports to Japan and western countries. (10, 349) Egyptian jets attacked the Israeli posts along the border of the Suez and in the Sinai on October 6, 1973. Also Syrian aircrafts attacked northern Israel. This was the fourth and most dreadful of the Arab-Israeli Wars. (13, 588) After Egypt launched this attack on Israel the Soviets threatened to intervene. Breshnev, who was the Soviet leader at the time believed that the Watergate scandal had weakened Nixon to such a degree that he would not react. The Soviets did back down, but the Arab world held the U.S. responsible for Egypt’s defeat by the Israelis. (2) On both sides, the U.S. and the Soviet Union supplied armaments. But despite all this machinery the strongest weapon in this war was oil in the form of an embargo, which is a cutback on production and exports. (13, 588)
Many believe that there was actually a shortage of oil, but there was no shortage at all. The Middle East just decided they weren’t being paid enough for their problem. (9, 2) OPEC, or the Organization of Petroleum Exporting Countries, which was originally formed to keep the price of oil down, was too fragmented and competitive to help solve the crises or to be a successful cartel, which is a combination of businesses or countries in this case to limit competition. (11, 1) The economics and now the politics of oil were changing. Iraq, Algeria and Libya were pushing for a price agreement and they said if one was not made they would “exercise our rights on our own.” This meant that they would not cooperate with OPEC and would set their own prices, which would most likely be high, or in extremes would be in the form of an embargo. Exporting countries took steps for the government to take over oil companies because they did not want the growing gap between posted prices and market prices to go to the favor of the oil companies. (13, 592) They were using petroleum as a political weapon by using the dependence of other countries on their oil supply and cutting off exports to those countries. Petroleum gave them the power to ruin the economies of other nations by increasing prices. (10, 349) Henry Kissinger said of the embargo, it “altered irrevocably the world as it had grown up in the postwar period.” (13, 588) And as Nicholas Lemann stated, “it demonstrated that America could now be ‘pushed around’ by countries most of us had always thought of as minor powers.” (8, 1142) The Arab Oil Embargo demonstrated just how dangerous the United State’s dependence on foreign oil was becoming. (8, 1132) This embargo resulted in the price of gas per gallon to jump from 30 cents to over a dollar. Also a “windfall profits tax” was presented to domestic oil producers. (9, 2) In 1973, the Northeast suffered both from severe winter weather and the gas shortage, which temporarily closed schools and factories. (8, 1132) The falling cost of the dollar, expensive federal programs, and costly environmental regulations, were just some of the few things Americans blamed for the energy crisis. (8, 1134)
As the federal government became more and more involved with solving the energy crisis, corruption became apparent. The Foreign Relations Committee held hearings on the energy crisis during the week of June 2, 1973. Senator George D. Aiken of Vermont attended and noted the corruption of the meeting in his journal. Witnesses were going over what the energy would need to be used for in the U.S. and completely left out agriculture. This was ludicrous because the agricultural industry was the largest consumer of petroleum in the national economy at the time. (1, 84) A bill was reported to Congress in February 1974 that would give the president more authority over the distribution of oil products. A cutback in the price of oil produced in the U.S. was presented and senators from the oil states wanted to block this. To them it was more important for the oil companies to remain stable than the nation as a whole to be stable. (1, 85)
As the energy crisis began striking close to home, citizens of the United States could see how huge of a problem energy had become. The 1970's had the highest unemployment rate since 1941 and the lowest industrial production since 1937. (8, 1140) By 1979 the inflation rate was all the way at 11.3% and rising. (8, 1135) This new inflation caused many Americans to doubt the “American dream” that their children would have a better life. Writer Nicholas Lemann wrote, “The nearly universal assumption in the post-World War II United States was that children would do better than their parents. Upward mobility wasn’t just a characteristic of the national culture; it was the defining characteristic.” (8, 1140) Insanely high prices throughout the 1970’s increased these concerns. In 1973 a barrel of crude oil cost $2.75 and in 1981 it went to 34 dollars. (10, 349) Crude oil prices quadrupled between October 1973 and March 1974. By 1981 the nation was consuming 20 trillion cubic feet of gas per year. Arab nations embargoed oil exports to the United States for a total of six months. Ironically, the production of natural gas in the United States was at its highest in 1973. But, this certainly did not counteract the embargo. (12, 5)
Running out of usable oil, or supposedly running out was become a major concern of the nation. Senate reports in 1975 indicated that the U.S. would run out of usable oil before the year 2000. (6, 32) Although energy use is still a problem today in 2003, it obviously did not happen as quickly as predicted. Without a doubt the entire crisis sprung from our reliance on foreign oil. Fewer oil wells were drilled in the U.S. starting in 1955 because foreign oil was cheaper and more accessible. But after 1973, foreign oil was more expensive and less available. (12, 59) 30 billion barrels of oil was discovered in northern Alaska in the late 1960’s, but this large addition to the world reserves was counterbalanced by an increase in oil consumption. (10, 333) Imports were greatly increased in the years leading up to the crisis. In 1970, the U.S. imported 3.2 million barrels per day. In 1972, 4.5 million were imported, and in the summer of 1973, 6.2 million were being imported. (13, 591) America’s response to the crisis was interrupted because of Nixon’s resignation of office due to the Watergate scandal. Ford, who did not take any impacting steps to solve the energy crisis, carried out the remainder of his presidency. (13, 512M) Carter, who was the next president-elect, carried out many acts to encourage energy conservation. He practiced this conservation in his own home by keeping the White House at 55 degrees during the night and 65 degrees during the day, and wore long underwear to keep warm. His plan for the nation promoted increased fuel production in the U.S. and development of alternate energy sources. (8, 1133) Prior to Carter presenting his plan to Congress, he appeared on television to address the public stating, “The energy crisis has not yet overwhelmed us, but it will if we do not act quickly…. This difficult effort will be the ‘moral equivalent of war’, except that we will be uniting our efforts to build and not to destroy.” He proposed an Emergency Natural Gas Act to control the distribution of gas throughout the country. Within one week Congress passed the act. (8, 1132) In November 1978 the National Energy Act was signed into law. (8, 1133)
The “second oil shock” occurred in 1979 when OPEC held up oil production, which caused gas prices to rise by 50%. Motorists in the U.S. waited in line at gas stations for hours frantically buying gas before it ran out. Carter was blamed for this. (8, 1133) Carter said of this “second oil shock”, “It is a crisis of confidence. It is a crisis that strikes at the very heart and soul and spirit of our national will. We can see this crisis in the growing doubt about the meaning of our own lives and in the loss of a unity of purpose for our nation. The erosion of our confidence in the future is threatening to destroy the social and the political fabric of America” (8, 1134) His television address did not include ways of dealing with the problem or looking to the future. Americans felt that Carter was not the man to lead them out of the crisis. His reelection campaign was made difficult because right before the election the Federal Reserve Board caused interest rates to soar when they put strong monetary controls to control inflation. (8, 1143) Also, making his reelection campaign difficult was the humiliation Americans felt as Iranian students took hostage sixty-three Americans in November 1979. (8, 1137) Ronald Reagan ended up winning the election to lead the U.S. into the 1980’s. Being a former actor, and holding strong conservative views, Reagan presented Americans with the strength that they desired for their weakening country. (8, 1143)
Throughout the 1970’s many steps were taken to make energy conservation an important aspect of American life. On October 31, 1973 in New York the Public Service Commission looked into the possibility of closing schools and cutting off heat in the subways. (4, 1) The president could limit hours of operation for schools and businesses, could ban advertising or displays of Christmas lights, and could enforce a maximum temperature in office buildings all due to the broad “Emergency Actions to Reduce Energy Consumption”. As early as November 2, 1973, an emergency energy act was proposed to Congress to “to suspend all environmental standards, to tax fuels, prohibit pleasure driving, order early closing of schools and businesses, impose rationing and take other steps to curb energy consumption.” (5,1) The energy crisis affected all aspects of society, even the automobile market. In 1973, 30-cent gasoline was no more and so was the “big American car.” Models such as the Honda Civic became popular because of their fuel efficiency. (2) For two decades there was even a federally mandated speed limit of 55 miles per hour in order to save energy. Later it was done away with to keep the government from getting too involved in state and local matters. (9, 7)
Some administration and Congress members wanted to add a 20 or 30 cent per gallon tax, but George P. Shultz, Secretary of the Treasury, knew this would only put more weight on the economy. The major problem with a large-scale conservation effort was getting Americans to conserve energy without causing more economic problems. (5, 26) Congress passed the Energy Policy and Conservation Act in 1975. These acts regulated domestic oil prices and set up standards for automobile use. (12, 5) The 800 mile long trans-Alaska Pipeline System built in 1977 brought 2 million barrels of oil a day from Prudhoe Bay to the port of Valdez. Due to this, imports from the Middle East were greatly reduced. (8, 1143)
Many called the energy crisis an “energy shortage”. This term should not be used because gas and oil are not the only forms of energy. Energy will only cease to exist the day our sun disappears. (9, 7) John R. Quarles believed that coal should replace oil as a boiler fuel. He was the administrator of the Environmental Protection Agency. (5, 26) Eventually the electric utility industry will have to look to other sources, the best of which would be nuclear power. Other choices would be coal, ethanol, and solar power. (9, 6)
Ethanol is what petroleum would most likely be replaced with. It is made from corn and other crops and therefore renewable. Use of ethanol would be extremely positive for the nation’s farmers and would be much safer for the environment. If a tanker spilled ethanol, it would just evaporate into the air. We do not use ethanol today because petroleum is cheaper. During the Arab embargo in the 1970’s, petroleum prices soared making ethanol look like a good deal. But the prices of petroleum were purposely kept below ethanol so it would not be replaced. (9, 4) Efforts to find new oil reserves were greatly reduced in the 1980's when oil prices fell. Oil and gas can also be made from bituminous sands, coal, and oil shale. Scientists are working on this, but it is extremely expensive. However, if oil prices continue to rise as they have done since the 1970’s, these forms of energy could become competitive in the worldwide market. (10, 349) Solar energy, wind energy and geothermal energy, which are all possibilities to replace oil, are all "diffuse" because they would not be useful in all areas of the world. (6, 42-43) Thomas E. Eastler said of finding alternate sources, "as a result of this unchecked exploitation, we are forced to consider the consequences of the end of the fossil fuel era. And, with the end of that era, I believe also, will come the end of America's fleeting love affair with petroleum." (6, 30)
Most experts believe that the demand for petroleum and the dependence on Middle Eastern oil will only increase in the future. (10, 349) Even if petroleum is replaced, the crisis could continue because the major companies that control oil have already invested in gas, coal, uranium and new energy sources such as oil shale and tar sands. So, the major problem is that the energy industry is extremely monopolized. (7, 336) Today the energy crisis of the 1970's seems so familiar. Oil prices are rapidly increasing, and our relationships with some of the Middle Eastern countries are extremely shaky. As President George W. Bush forges on in his efforts for a war with Iraq, most people are concerned with disarming Iraq of their weapons of mass destruction. The one weapon of mass destruction that could never be taken away from them is oil. We import so much oil from the Middle East that a war could greatly influence oil prices and imports. The energy crisis of the 1970’s caused the United States to step up and begin conservation efforts and explore alternate energy sources. If oil prices continue their uphill climb, these alternate sources will without a doubt become economically and politically superior to oil. And perhaps one day, we will discover a resource that will supply the world with infinite energy.
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