The rising price of oil has a negative impact on our economy and threatens to stifle our anemic recovery from the government produced and bureaucratically fostered Great Recession. How did we get here? Has anyone ever pinpointed the problem beyond blaming speculators and rising demand? Has anyone shown us how our energy independence could be achieved?
Remember the 1973 oil embargo? This was our first oil shock. How did it come about and what did we do about it? Did these policies solve the problem?
In 1973, the U.S. and the Western world were experiencing an accelerating inflationary spiral. Twenty years of prosperity and accelerating population growth created heavy need for raw materials that were not being produced internally which made them highly vulnerable to commodity cartels. Due to the fall in domestic production mainly because of the powerful man-made global warming lobby, the demand for Middle Eastern oil increased. The Organization of Petroleum Exporting Countries (OPEC), formed in 1960, determined to increase its profits at the expense of the West grew stronger.
President Nixon, in an attempt to control inflation, imposed price controls on oil in March 1973. The U.S. which has the world’s largest reserves of oil had been self-sufficient in energy up until the late 1950s was by the 1970s importing over 35% of its energy needs. Through the lack of planning U.S. petroleum reserves were depleted and the pride that goes before a fall led our government, corporations, and individuals to be entirely unprepared for the radical change about to take place.
On the Jewish high holy day of Yom Kippur October 6, 1973,, Egyptian forces attacked Israel across the Suez Canal, while at the same time Syrian troops attacked the Golan Heights. With help from the U.S., Israeli forces succeeded in pushing into both Syria and Egypt until a cease fire saved both Arab regimes. On October 17, OPEC struck back imposing a total oil embargo on the U.S. and increasing prices by 70% on Western Europe, and overnight the price of a barrel of oil to these nations more than triples going from $3 to $5.11.
This led to a series of presidential statements and actions, all aimed at rallying the American people in the face of growing dependency and international impotence in the energy sector.
Richard Nixon said, “Let us set as our national goal, in the spirit of Apollo, with the determination of the Manhattan Project, that by the end of this decade we will have developed the potential to meet our own energy needs without depending on any foreign energy source.”
President Gerald Ford said, “I am recommending a plan to make us invulnerable to cutoffs of foreign oil. … new stand-by emergency programs to achieve the independence we want…”
President Jimmy Carter said, achieving energy independence was the “moral equivalent of war.”
Ronald Reagan, always looking for the free market approach said we should look to, “native American genius, not arbitrary federal policy, to be free to provide for our energy future.”
In 1991, in the prelude to the First Gulf War, President George H.W. Bush announced, “There is no security for the United States in further dependence on foreign oil.”
In 2000, President Clinton said, “The nation’s growing reliance on imports threatens the nation’s security because it increases U.S. vulnerability to oil supply interruptions.”
George W. Bush repeated recent presidential history by insisting, in his 2003 State of the Union address, that one of his administration’s goals was “to promote energy independence for our country.”
Mr. Obama continued the chorus saying, “America’s dependence on oil is one of the most serious threats that our nation has faced.”
Did any President ever have an energy policy which effectively dealt with the problems of oil production and supply?
Reagan said, “The best answer, while conservation is worthy in itself, is to try to make us independent of outside sources to the greatest extent possible for our energy.”
Ronald Reagan also said, “Our national energy plan should not be a rigid set of production and conservation goals dictated by Government. Our primary objective is simply for our citizens to have enough energy, and it is up to them to decide how much energy that is, and in what form and manner it will reach them. When the free market is permitted to work the way it should, millions of individual choices and judgments will produce the proper balance of supply and demand our economy needs. ”
As soon as he became president, Ronald Reagan ended the price controls on domestic oil first imposed by Richard Nixon; these controls had contributed to both the 1973 Oil Crisis and the 1979 Energy Crisis. Almost immediately the price of oil fell, and during the 1980s America didn’t experience the gasoline lines and fuel shortages of the 1970s. In addition, the removal of price controls ignited a boom in domestic drilling which arrested America’s slide into energy dependence.
As to the energy questions: How do we end our dependence on foreign oil? How can we achieve the energy independence which every President since Nixon has said is a matter of national security? Stop wringing our hands and moaning about our situation, stand up like our ancestors have and boldly declare our energy independence! In practical terms we should: take the shackles off our domestic oil industry, build new refineries, develop better distribution of natural gas, expand the use of nuclear, wind, solar and every conceivable form of energy, and drill baby drill!
Then in this new situation with America reaping the benefits, the jobs, the growth of a renewed sense of freedom and security let’s barter. One barrel of oil = one bushel of wheat.
Dr. Robert R. Owens teaches history, political science, religion, and leadership for Southside Virginia Community College. Dr. Owens is the author of “America Won the Vietnam War,” “The Asuza Street Revival,” and called “The Constitution Failed.” He is available for speaking engagements.