The United States has also bulked up its military presence in the region. After the Soviets invaded Afghanistan and Iran’s new Islamic government seized U.S. hostages, President Jimmy Carter in 1979 created a rapid-deployment force and vowed that the United States would intervene if necessary to keep oil flowing out of the Persian Gulf. In 1983, President Ronald Reagan created U.S. Central Command, giving the American military an even more powerful presence and a greater ability to keep open the narrow Strait of Hormuz, through which about 17 million barrels of oil flow each day. At home, Washington scrapped the oil price controls and 1970s rationing system that exacerbated long lines at the pump.
Oil sellers have power only if there are oil buyers. And while the United States can do little to alter the geography of production, it can attack wasteful consumption. The fuel efficiency of the average U.S. automobile was lower in 1973 than at any time since World War II. Since the adoption of standards in 1975, the average fuel efficiency of vehicles has improved by about 50 percent. U.S. gasoline consumption, long assumed to be on an inexorable upward march, may have peaked in mid-2007. Standards negotiated and implemented early in the Obama presidency should keep American consumption on that path.
The petroleum we have avoided consuming exceeds the output of most individual OPEC members — and conservation is an energy source whose expansion doesn’t threaten the environment. Unfortunately, this lesson is still being learned in China, which in September became the world’s leading net oil importer.
Climate change provides another impetus for cutting consumption. Even if oil were plentiful and cheap, climatologists warn that the continued burning of fossil fuels will have disastrous consequences for the climate, something never considered in the 1970s.
As long as we are burning fossil fuels, though, U.S. domestic oil production matters. It peaked in 1970 at 9.6 million barrels a day, slumped to 5 million barrels a day in 2008 and has now rebounded to 7.5 million barrels a day. The revolution in shale drilling — a combination of horizontal drilling and hydraulic fracturing known as fracking — has also helped keep the U.S. economy from being at the mercy of events in the Middle East. The oil shocks of the 1970s also led to the boom in ethanol, which today displaces about 580,000 barrels a day of crude oil.
The 2.5 million-barrel-a-day increase in U.S. supplies over the past five years has given the United States greater leeway in its foreign policy and made the country less susceptible to energy manipulation. Without this ramp-up in supplies, “we would not have been able to carry out sanctions on Iran,” says Daniel Yergin, vice chairman of IHS and the author of “The Quest: Energy, Security, and the Remaking of the Modern World.” Those sanctions have helped change the tone of Iranian officials recently, though they have yet to shift Iran’s position on its nuclear development program. Without the shale drilling revolution, Yergin says, “there would be a lot of hand-wringing about how we compare” to the 1973 embargo.