NO DOMESTIC ISSUE since the economic breakdown of the Great Depression has been as intractable as the energy problem. Since OPEC's teeth were certified by the Arab embargo in October 1973, U.S. leadership and policymaking have floundered.
Why have there been so many miscalculations and misjudgements?
Why have three presidents, and four querulous Congresses, been unable to come to grips with the energy issue?
Why have the economists, almost to a man, erred on their assessments and "solutions"?
Why has the can-do oil industry lured the nation deeper and deeper into a petroleum impasse?
Why have nearly all the government and industry "experts" who pointificated and prescribed been so consistently wrong?
One way to try to answer these questions is to study the defaults and wrongheaded actions of the past six years, to examine the events and pronouncements which have marked each step of our journey into the energy swamp of the 1970s. MAJOR PROPOSALS AND EVENTS 1973
The OPEC cartel succeeds in quadrupling world oil prices. Embargo decreed by Arab nations and enforced by the international oil companies.
President Nixon announces elimination of imports by an "Energy Independence" plan geared to increase the domestic production of petroleum by 1980. 1974
Arab nations voluntarily end their embargo in March.
U.S. leases offshore areas and shale tracts.
Despite veiled threats of military intervention, prices of OPEC cartel are not reduced.
Trauma of oil prices sets stage for severe global recession. 1975
Severe recession inhibits growth in energy use.
With 1985 independence goal, President Ford proposes production-oriented program encompassing
thousands of new oil wells
250 new coal mines
200 more nuclear plans
30 new oil refineries
voluntary mileage improvements by Detroit.
The new president also proposes
1. Reducing oil limits by stiff tariffs and the decontrol of domestic oil and gas (coupled with a windfall profits tax).
2. Creation of a $100 billion federal energy investment corporation to generate 1 million barrels a day of synthetic fuel capacity by 1985. 1976 No significent new proposals are presented to Congress -- and no significant energy legislation is enacted. 1977
Winter cold wave combines with drop in natural gas output to close some schools and cause 1 million workers to be laid off.
In April President Carter offers a "comprehensive" energy plan which includes:
a stiff crude oil tax
A gas-guzzler auto tax
stand-by authority for gasoline rationing
measures to aid utilities companies to convert to coal. 1978
After a conference committee stale mate lasting nearly one year, President Carter's tax proposals are rejected and Congress votes for phased decontrol of natural gas prices.
Dry-hole offshore drilling in Atlantic Ocean and Gulf of Alaska shocks experts who had predicted these areas probably contained upwards of 50 billion barrels of oil. 1979
Turbulence caused by the fall of the shah reduces Iranian exports close to zero, produces a world oil shortage and revives gas lines in several states.
President Carter announces decision to phase out oil price controls, asks Congress to impose windfall profits tax on the oil industry.
OPEC nations meet and increase oil prices 50 percent.
President Carter asks Congress to create a federal corporation to spend $88 billion to get a new synfuels industry in place for the 1990s.
U.S. eliminates purchases of Iranian oil in retaliation for taking of hostages. THE NATIONAL RESPONSE 1973
Nixon administration readies plans to:
explore promising new oil provinces on the outer continental shelf and in Alaska.
lease large oil shale tracts in Colorado and in Utah.
encourage more production of coal. 1974
Watergate paralyzes Washington; Congress provides few initiatives as representatives of consumer and producer states evolve oversimplified "solutions" to the energy problem.
Treasury Secretary William Simon see big increases in non-OPEC production, predicts OPEC prices will fall.
Secretary of State Henry Kissinger announces "vast new effort" by counter-cartel to lower prices, says reducing U.S. imports from 7 million to 1 million barrels a day by 1985 is feasible. 1975
Congressional Democrats argue that increases in energy costs should be avoided until the recession is over.
With the 1979 election near, Congress finally passes -- and President Ford reluctantly signs -- legislation which:
eliminates the tariffs imposed by the president.
provides gradual decontrol of crude oil prices.
mandates a doubling of auto mileage performance by 1985.
Congress rejects the proposed energy investment corporation as a "giveaway" to the big oil companies. 1976
Energy issues are muted by both candidates in the general election campaign. 1977
House passes the president's program, but Senate rejects its tax increase provisions and insists that natural gas prices be decontrolled. Votes are provided by pro-consumer senators (who oppose increase in energy prices) and by senators from oil-producing states. Oil state representatives demand "plowback" amendment which would give oil companies part of crude oil tax revenues as an incentive to find more petroleum.
Years ends with no action. 1978
U.S. relaxes as Alaska oil causes one-time reduction in imports. Talk of an "oil glut" causes optimism and encourages OPEC ministers to hold down price increases.
Appearance of small surplus of natural gas, after decontrol legislation passes, stirs gas industry optimism that a "new era" of plenty is at hand. 1979
Pro-consumer congressmen introduce bills to repeal president's action decontrolling oil prices.
At the urging of President Carter, King Khalid of Saudi Arabia announces 1-million-barrel-a-day production as a "birthday present" to the United States on July 4.
House and Senate pass differing versions of windfall profits tax. President's synfuels program passed in House, scaled down in Senate. THE ENERGY OUTCOME 1973
U.S. is unable to break the embargo. First lines form at gas stations since World War II.
OPEC price increases stick as cartel shows its muscle. 1974
Decline of domestic production of oil and gas continues for fourth year in a row.
Dry holes cause industry to abandon Destic Dome area in Gulf of Mexico identified as "the most important geological structure in North America."
Oil company profits soar.
Imports (and dependence on Arab oil) increase. 1975
Due to the recession, oil imports incease by only a small margin.
Despite a sharp increase in drilling, U.S. production of oil and gas continues to decline.
Oil industry forecasts about finding more oil are dampened when:
U.S. Geological Survey reduces its official estimates of our potential undiscovered oil and gas by two-thirds, and
natural gas experts of the Federal Power Commission conclude that domestic output has peaked and begun an irreversible decline. 1976
Imports account for 42 percent of U.S. oil consumption versus 35 percent in 1973.
Domestic oil output drops from 9.2 million barrels a day in 1973 to 8 million barrels a day in 1976. 1977
Gasoline consumption jumps as U.S. auto sales set new records.
Oil production shows small increases for first time in six years as Alaska pipeline begins operation and provides over 500,000 barrels of new oil. 1978 Imports from Middle East show sharp increase as bill for imported oil jumps from $4.6 billion in 1977. Signs of a "dollar crisis" appear as outlays for oil create largest trade deficit in history.
Demand for gasoline reaches record level in July.
Huge trade deficits persist and sustained decline of dollar forces U.S. to mount monetary rescue effort in November.
Proven reserves of oil and gas continue on path of steady decline. 1979
Despite large increases in drilling, since October 1973 the United States has pumped out and consumed almost twice as much oil and gas as the new petroleum reserves it has discovered.
Oil imports continue at high levels, and it is certain that our bill for imported oil in 1980 will exceed $70 billion.
The dollar is hemorrhaging again. Bankers express doubt that petrodollars can be recycled.
White House revives discussion of stiff tax on gasoline. QUOTATIONS OF THE YEAR 1973
"In the spirit of Apollo, with the dedication of the Manhattan Project . . . By the end of the decade we will . . . meet our own energy needs without depending on any foreign energy sources." -- President Nixon
"We [6 percent of the world's people] use 30 percent of all the energy. That isn't bad; that is good . . . We are the richest, strongest people in the world . . . and may it always be that way." -- President Nixon 1974
"We'll break the back of the energy crisis this year." -- President Nixon
"If OPEC prices hold, the economic law of unity indicates U.S. will be able to double its oil production to 20 million barrels a day." -- Economist Hendrik Houthakker
"The [oil] industry is capable of a phenomenal explosion of output in the next three years." -- Fortune magazine 1975
"Throughout history, nations have gone to war over natural advantages. And now the exorbitant oil prices set by the oil producing countries and their cartel are threatening the breakdown of the western order and security." -- President Ford
"Allocations and rationing are a small price to pay to avoid total economic collapse and to take America's economic destiny out of the hands of the Arab oil shieks." -- George Meany
"A lot of guys who have marginal districts can't vote for a gasoline tax, because if they do they won't be back here next time." -- Rep. Sam M. Gibbons (D-Fla.) 1976
"During the past three years we have experienced paralyzing power of negative thinking." -- Scientist Philip A. Abelson
"With domestic oil prices held artifically low until after the election, neither candidate expressed a proper sense of urgency about our energy problem." -- John C. Sawhill 1977
"The cornerstone of our policy is to reduce demand through conservation. Conservation is the quickest, cheapest, most practical source of energy." -- President Carter
"Look, we're not running out of oil . . . we're not going to run out in your lifetime or mine." -- Clifton C. Garvin Jr., chairman, Exxon 1978
"Although U.S. oil and gas production hit their peak several years ago and are declining about 8 percent per year, the nation has avoided serious trouble by using more foreign oil. We are walking into a disaster in the next three or four years with our eyes wide open." -- John F. O'Leary, energy undersecretary 1979
"The country that put a man on the moon must now create an Apollo project to produce alternate fuels." -- Vice President Mondale
"I am setting the further goal of cutting our dependence on foreign oil by one-half by the end of the next decade . . ." -- President Carter
"Demagoguery is unlikely to provide an effective substitute for crude oil." -- Energy Secretary James Schlesinger, farewell speech
"There's no way, for any amount of money, that you can reverse the decline curves on crude oil production in the U.S. I don't care if crude oil goes to $100 a barrel." -- Robert Baldwin, Gulf Oil executive