In 1973, OPEC – the Organization of Petroleum Exporting Countries – had simply decided to not sell us oil, and we had a huge dependency on them *. I was trying to find the percentage and could not readily find it, although 40% seems to come to mind.
I remember coming back from Germany, my Army tour finished, in December 1974. I don’t really recall huge gas lines in Germany, although now that I have mentioned it, their government banned Sunday driving. In the U.S. driving was not banned but most service stations limited the amount of fuel one could purchase. That was not some government edict, but simply too many people wanting too little inventory.
How it was controlled was up to each service station owner. Many restricted sales to draconian levels, such as 5 gallons. Imagine this after waiting an hour or 2 in line to get that fuel.
Now that I mention it, the only thing our government did in response to this was enact a national 55 MPH speed limit. After a few months, that became widely ignored.
Try going 55 MPH on a desolate I-5 with nothing ahead but the Los Angeles basin in several hundred miles. And as many rightfully claimed, their vehicles didn’t get any substantial mileage increase from this lowered limit.
Politicians of both parties in Washington uttered a lot of promises that this would not hold, but in the end, they did nothing. To do something would have been to increase the supply at home.
OPEC was never a “friend” of the West of course; but followed their own interests. My late father’s business involved the oil business and many years ago he had an astute observation: “If all that your country had to export was oil, and when you ran out you had nothing, wouldn’t you want as much as you could get for it?”
Apparently OPEC’s stranglehold over the oil supply has finally been broken, and not by our government or any government, but American innovation.
“Remember when America’s political class fretted about “peak oil” and dependence on foreign energy? So much for that. The U.S. the other week for the first time in 75 years became a net petroleum exporter as the Organization of the Petroleum Exporting Countries wrangled over how to respond to America’s growing energy bounty.
U.S. crude production has surged 20% in a year and nearly tripled in a decade thanks to advances in hydraulic fracturing and horizontal drilling. American output is rising at the fastest rate in a century. Earlier this year the U.S. eclipsed Saudi Arabia and Russia as the world’s largest oil producer.
For nearly six decades OPEC has dominated oil markets by setting production quotas among its 15 members. In late 2014, OPEC flooded the market with oil in an effort to break U.S. drillers who were burning cash on mounds of debt. As oil prices fell below $40 a barrel in 2015-2016, many wildcatters folded or were absorbed by larger producers.
But the survivors became more efficient. Technology—including drones with thermal imaging to detect leaks along with improvements in horizontal drilling—boosted productivity. Over the last five years production per rig has more than tripled in the Permian Basin and quadrupled in North Dakota’s Bakken Shale. While the Bakken rig count has fallen by 70%, output has increased by a third…
OPEC and Russia last week agreed to scale back production collectively by 1.2 million barrels a day, but the meeting exposed the cartel’s cracks. Qatar quit amid hostilities with the Saudis. Small producers carped they were too insignificant to affect global supply. Algeria produces one million barrels per day, which is as much as U.S. output has increased in five months.
Saudi Arabia, Russia and allied producers agreed to shoulder the bulk of the cuts while Libya, Iran and Venezuela received exemptions. Some in the media claim the Saudis defied Mr. Trump’s pleas to keep oil prices low, yet U.S. shale producers are likely to benefit from OPEC’s cuts by capturing more market share.“
Not only that, but a huge new oil field has been discovered in Texas that may be the biggest in the USA.
It’s about time.
- update 12-17-18 0114: The reason OPEC enacted this was to punish the West for their support of Israel in the 1973 Yom Kipper War.