Negative sentiment against our energy systems is a daily occurrence. Anger and frustration amplify on news of a train derailment or a pipeline leak. Poorly understood oil field processes like hydraulic fracturing or fracking stoke the fires of discontent. And opposition is not only pointed toward oil, natural gas, coal and nukes. Even the cyclic whir of a wind turbine elicits stubborn, “not-in-my-backyard!” howls from anti-development locals.
Calls to ban energy processes are being heard across the energy spectrum. A combative segment of the consumer population is rallying hard against long-standing systems that serve to cook our food, light our ways, heat our homes and turn our wheels.
But what if this wish of energy prohibition came true?
What would happen if our pipelines were deliberately turned off, even if just for a short period?
In fact, we’ve lived that movie before. Most have either forgotten, were too young to remember, or not even born on Oct. 19, 1973.
Forty years ago this past weekend, vital oil supply lines to many Western countries were abruptly cut by Arab members of the Organization of Petroleum Exporting Countries (OPEC). Any Western country supporting Israel in the Yom Kippur War had their spigots to Middle Eastern pipelines and tankers turned off.
A picture in Life magazine captures the moment like no other: A motorway minus the motors due to a lack of gasoline. Flip pages in other news media of the day and you’ll see pictures of angry people lining up for energy rations. Behind the scenes, power plants that burned oil were short of feedstock. And the price of oil shot up 75 per cent year over year, causing a long-lasting economic slowdown.
What’s notable is that the Arab oil embargo only shut off partial supplies to Western industrialized countries, which still had the benefit of other non-OPEC oil sources. It only took about a 25-per-cent constriction of the arteries to cause the massive energy heart attack.
In retrospect, the first oil shock of 1973 was a crisis that was waiting to happen. There was uncontrolled growth of 8 per cent on 55 million barrels a day of consumption leading into the eve of the crisis. Endless, cheap supplies to fuel all the machinery was just assumed.
The first shock, followed by a second in 1979, led to major improvements in efficiency and a significant shift in the market share of primary fuels. In many Western countries, oil was legislated out of power generation. The news was welcomed by the coal and nuclear industries, both of which were only happy to pick up the deficit. By the late 1980s, oil was mostly relegated to transportation fuels, lubricants and feedstock for polyester suits.
Could another oil crisis like 1973 happen again today? Yes it could, although if the trigger came from OPEC, it would most likely be involuntary as opposed to premeditated. Many cartel countries are in rough political shape compared to the 1970s.
Libya is a mess, struggling to produce with stability, post-revolution. Due to sanctions and deteriorating infrastructure, Iran’s oil output is 65 per cent of what it should be. And while Iraq is expanding capacity quickly, the atmosphere there is tense with a sharp rise in recent violence.
Collectively, these countries have a sustainable production capacity of approximately eight million barrels a day. Syria, which is not an OPEC member, but participated in the historic embargo, is beyond a mess. Unplanned oil production outages today are at their highest levels since the data have been tracked by the Energy Information Administration. Yet within this turmoil, OPEC countries still maintain a significant 35-per-cent market position, down only a few points from their historic highs. Although their influence has waned, their contribution to an oil-hungry world is still hugely consequential.
Against this backdrop of uncertainty, consumption has far from abated. Although oil consumption is growing at a much lower rate than in 1973, it’s on a much larger volume of 90 million barrels a day. And while it’s true that non-OPEC countries such as the U.S. and Canada are in the midst of an oil production renaissance, the events of 1973 teach us that it only takes a crimp in the supply lines, not a complete shutdown, to cause big problems and societal panic.
Unlike the 1970s and 80s, coal and nuclear are not viewed as palatable substitutes, nor are they transportation fuels. In the event the oil valves are turned off, we’re left with natural gas that relies on fracking, and renewables that don’t have scale.
Our society is in a mode that wants all the end-use benefits of our energy systems, but none of the essential infrastructure and upstream processes that are behind our light sockets, stove tops and steering wheels. While we wrestle to reconcile how to live with our energy systems, the fading memory of 1973 reminds us what it’s like to suddenly live without.
Peter Tertzakian is chief energy economist at ARC Financial Corp. in Calgary and the author of two best-selling books, A Thousand Barrels a Second and The End of Energy Obesity.Report Typo/Error
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