Whatever happened to the Energy Crisis?

Factual Questions
1

I remember the Seventies (albeit vaguely—I was just a kid then), when it was claimed that the Earth’s supply of nonrenewable fossil fuels (oil, coal, natural gas) was running out. At the current rate of consumption, we would supposedly be all out of oil and gasoline in a relatively short time. Gas was not only more expensive than it had ever been before, but it was in short supply (at least in some places) and there were lines at gas stations. A 55 mph speed limit was instituted nationwide to conserve energy, cars became smaller and more economical, and people were urged to carpool or use public transportation.

So, what happened? How much truth was there behind the perception that we were running out of fuel? Are oil supplies much more plentiful than we thought? Are we in danger of running out during my lifetime? Why is conservation no longer stressed?

I could see this morphing into a Great Debate, but at least to start out with I’d like Just The Facts.

2

The 1970s energy shortage was not caused by running out but by the Arab oil embargo in 1973. Fuel prices rose dramatically and the effect was severe on the US economy.

As for running out this topic is subject to plenty of debate but it’s becoming clear that oil is getting harder to extract. I don’t think anyone believes that oil will run out completely all of a sudden with the last well sucking air but that it will be a slightly more gradual process where oil becomes more expensive as all the “easy” oil has been used.

Search “arab oil embargo” on the web and pretty much any oil and energy topic in great debates to learn more.

3

Because public policy and the national news media are currently controlled by ultra-right wing conservatives, specifically the big energy corporations like Halliburton, etc. It’s not in their best interests to urge people to conserve when they’re trying to sell more SUV’s and electricity-fed gadgets…all the while charging $2.30/gallon for gasoline despite the sharp increase in supply from U.S.-occupied Iraq.

Sorry, I really tried not to GD-ify my answer. I really, really tried. :frowning:

4

As far as the US is concerned, I’m not certain that anyone outside of an Art Bell radio show has ever claimed publically that coal is in imminent danger of running out. Estimates of coal reserves vary, but range from a minimum of 190 years to a maximum of 300 years, even accounting for high economic growth.

Coal does have a “Hubbert-esque Peak” that people try to apply to it, which I often see mentioned as being around 2100-2150. The big problem with this is that coal is not even close to being a homogeneous product and resource, and the error involved in predicting reserve utilization is something I have helped write a book-length work about.

The question with coal is - can we afford to use it, and release all that carbon?

5

They originally dropped the national speed limit to 50 mph, but so many people complained that it was raised to 55 as a compromise. Now it’s 65 or 70 many places.

What’s been said: the gas shortage was due to OPEC first embargoing, then raising the price of their crude rather than an actual shortage of oil. The result was mandated higher milage for cars, opening new crude sources like the North Sea and Alaska, and better technology for finding and extracting oil. Adjusted for inflation, gas retails at the pump for much less than it did in the 70s. Energy effciency in other areas such as home insulation and appliance power usage has made a dent as well. No one would have bothered spending thousands of dollars on foam insulation and heat-exchange air ventilation back when fuel oil was dirt cheap.

6

While the Arab oil embargoes created spikes in the price of oil, it was the solidarity of OPEC in that lead to high long term prices in the 1970s. Jimmy Carter actively put the US on an energy diet, one of many great things he did for the country, which in turn made cracks in OPEC solidarity. Lower prices helped the economy significantly in the 80s and 90s (but for which JC naturally gets no credit).

The Bushies made a pact with the devil in 2000 to raise oil prices so they could win the election. Problem was: the devil never really lowered them like they promised. The USA’s energy binge plus sinking dollar has made OPEC even nastier. There is no significant oil coming out of Iraq for a long, long time. It’s currently a net oil importer. The Bushies have misplayed 4 hands in world oil poker badly. (Add Nigeria and Venezuela.)

The Energy Crisis is back big time and it’s going to make the economic problems of the 70s look like a cakewalk.

Absolutely none of which appears in the mainstream US press. Rich conservatives don’t like these things being talked about openly.

7

Despite KGS’s ill-informed rant, the current energy supply situation has more to do with capital investment, infrastructure and logistics than any hazy Vast Right-Wing Conspiracy.

Supply has tightened in the last few years, as drilling has dropped off (having hit an historical N. American low of 488 rigs working in 1999 - for comparison, there were ~4500 rigs working in N. Am. when I started in this business). Natural gas supplies are a greater concern at present than oil.

Since I don’t feel like writing a history book tonight, I’ll only go back a few years - to the industry crash of 1999. When energy prices tumbled then, investment dollars became extremely hard to find and activity dropped to record lows. While the market recovered to a degree, terrible damage was done to infrastructure. The seismic companies were largely wiped out and drilling rig numbers shrank.

When prices recovered to a degree that allowed prudent asset managers to delve once again into energy (in 2000), a real concern was rig availability. While there were a ~1600 rigs reported available, we never could muster more than ~1300. The rest just didn’t really exist as viable units. We could top lease a competitor when their fuse ran down to four months because we knew thay couldn’t get a rig in that window.

Our rig fleet is now working at near capacity, hovering around 1100 working for most of the past year. Seismic crew activity is a leading indicator of future drilling, and there’s a worrisome picture on that front. AFAICT, there are only ~18 seismic crews active in N. America at this time. Compare that to ~1800 when I started working.

So, the industry got knocked on its ass a few years ago and supply is, at present, a little bit tight. Infrastructure fell apart and we’re working at max capacity right now.

Perceptions within industry as to why new drilling dollars remained hard to capture as product prices rose focus on the overheated stock market of the Clinton era. Investors could (think they were going to) make more playing the dot.coms.

Now we’re seeing a market where the economy is expanding and the energy industry is struggling to catch up. Hence, price increases as demand starts to outpace supply.

Back to the OP. Our reserve estimates of 20 or 30 years ago were based on what we knew at the time. Since then. we’ve become far more efficient in both identifying reserves and recovering them. For example, the advent of 3D seismic has allowed us to pursue reservoirs that were previously either undetectable or too risky to drill. There’s a lot more accessible to us now than there was during the era of the first embargo.

All of the above being said, your current energy prices are low. Cheap. Last week’s average N. American price of $1.80/gallon of gasoline would have been ~$5 in 1980 prices. Gasoline was, what, about a buck then?

8

Great post Ringo.

From what I read our US oil production peeked in the 70’s and now our production is 30% lower. Seems I remember President Bush wanting to drill in the Arctic waste land but the public and the environmentalist fought him.

The SUV explosion sure is not helping. Probably they won’t be so popular soon.

9

Originally posted by Ringo:

Your point is correct, but the illustration is wrong. Actually $1.80 in 2002 dollars is worth $0.76 in 1980 dollars. (The Inflation Calculator.) And since gas was selling back then for much more than $0.76/gal, gas was more expensive in 1980 than it is today.

See here for a nice graph of inflation-adjusted gasoline prices.

10

…Don’t forget, there’s still Smilin’ Joe Fission to fall back on, once the oil’s used up.

Just look at France…75% of their electricity comes from Nuclear Power, with no Chernobyls yet.

11

Something no one has mentioned yet:

The blocks-long lines of cars at gas stations that happened in 1973 were not directly due to the OPEC embargo of the US. The embargo would have only caused gas prices to go up. Instead, Nixon made things far worse by instituting mandatory price ceilings on gasoline. Not surprisingly, gas stations weren’t too excited about the idea of selling gasoline cheaper than their cost. Shortages became rampant as gas stations preferred to be “out of gas” rather than give it away.

Of course, Nixon and others blamed it all on the “energy crisis” instead of their own bungled economic meddling.

12

Political opinions and conspiracy theories are not welcome in this forum. We have other forums for that. You may both consider yourselves warned

You didn’t try near hard enough.

To prevent future problems before they get out of hand, I’ll remind folks that we don’t need any debates this forum about SUVs, the Arctic National Wildlife Refuge, nuclear power, the economic policies of Carter and Nixon, or anything else. Just verifiable facts.

bibliophage
moderator GQ