But this sort of euphoria masks the fact that crude oil prices are global, and global markets remain taut. Greater reliance on our own resources — or Canada’s via the Keystone XL pipeline — helps reduce our trade deficit, but American motorists are still paying high prices at the pump.
“ ‘Energy independence’ is a popular mantra and guaranteed stump applause line,” says Robert McNally, founder of the Rapidan Group, a consulting firm. “But since oil is globally traded and fungible, reducing imports cannot ensure low and stable prices. Canada and Norway are major oil exporters whose motorists ride the global oil price roller coaster like everyone else.”
That roller coaster usually rises when spare production capacity is less than 4 percent of global consumption. Recently, that cushion has shriveled to 2 or 3 percent because 3 million barrels a day have been removed from the market. That isn’t because of any embargo or concerted cartel behavior by OPEC. It is a result of sanctions on Iran and disruptions caused by domestic strife in Nigeria, Sudan, Libya and Syria. Saudi Arabia has cranked up its output to compensate.
Rising U.S. oil output also threatens to undermine a consensus created by the 1973 embargo: that the Middle East is a vital strategic interest of the United States. Today, Americans, weary from two wars, are less interested in patrolling the world’s oil choke points.
“Our growing domestic oil supply is amplifying this mounting non-interventionist trend,” adds McNally, who was the energy expert on President George W. Bush’s National Security Council and frequently briefs members of Congress. “We are increasingly hearing in political and military circles the question: ‘Why should we continue to defend China’s oil supply when our own domestic production is booming?’ ”
But as long as at least 20 percent of global oil production is flowing from the Persian Gulf, the United States will be unable to walk away. A crisis there would be a crisis everywhere, from China’s factories to Main Street America.
There are, however, constraints on OPEC, too.
“The net effect of the oil embargo was a boomerang on the oil producers, and they know it,” says Schlesinger, who became Carter’s energy secretary. “They know that using the oil weapon results in a loss of market share and incentives to others to find substitutes for their oil.”
It’s also worth noting that, as of July, oil-exporting nations owned $257.7 billion in U.S. Treasury securities, giving them a huge stake in the American economy, something they didn’t have in the 1970s. Firing the oil weapon could result in a self-inflicted wound.
Forty years ago, on Oct. 14, 1973, U.S. military planes landed in Israel with arms and ammunition. On Oct. 17, Arab members of OPEC slashed output and raised prices. On Oct. 19, Nixon asked Congress for $2.2 billion in emergency aid to Israel, and Libya promptly cut off exports to the United States. On Oct. 20, Saudi Arabia and others followed suit.
A month later, on Nov. 25, Nixon, embroiled in the Watergate scandal, spoke to the nation from the Oval Office and called for a Project Independence
, so that by 1980 Americans would “not have to rely on any source of energy beyond our own.” Every president since has echoed the call.
The United States should continue to reduce its dependence on oil, both foreign and domestic. Yet the global nature of oil prices, the need to stand by our oil-importing allies, the danger of international economic instability and the threat of climate change should force us not to dwell on independence, but to accept and manage our interdependence.
Steven Mufson, author of “Keystone XL: Down the Line,” covers energy and other financial news for The Washington Post.