Up until 40 years ago, few Americans ever questioned the extent to which their lifestyles relied on cheap gasoline. The oil crisis of 1973 changed that forever as horrified people watched gas prices spike astronomically and gas stations run dry while drivers waited helplessly in long lines for their turn at the pump. But the cataclysmic event also had surprising benefits, argues Michael Ross, a UCLA professor of political science in the College of Letters and Science. In a forthcoming commentary for Foreign Affairs, he contends that the crisis may have actually “saved the planet” by forcing Western governments to adopt far-reaching environmental reforms.
Ross is known as one of the world’s foremost authorities in the burgeoning field of natural resource politics. He specializes in the study of oil wealth and its surprising political effects. Ross recently discussed the oil crisis and its aftermath with UCLA Today’s Meg Sullivan.
What happened 40 years ago this month?
It was the beginning of the 1973 oil shock, which transformed the world’s energy markets. On Oct. 16, 1973, delegates from six Persian Gulf countries raised their oil price by 70 percent to $5.12 a barrel. Over the next two months, the Arab members of the Organization of Petroleum Exporting Countries (OPEC) cut production and stopped oil shipments to the U.S. By the time the embargo was lifted in March 1974, oil was selling for about $12 a barrel — almost four times its earlier price.
I was a child at the time, and I vividly remember how upset adults seemed.
Me too. The 1973 embargo really was a shock for most Americans, who enjoyed virtually unlimited supplies of cheap oil in the 1960s. The real price of oil had been falling steadily since the end of World War II. A barrel of crude cost less in 1970 than at any time since the Great Depression. Suddenly, in 1973, Americans were forced to wait on lines to buy gasoline and were asked to turn off their Christmas lights.
At least initially, who seemed to benefit from the crisis?
Gasoline-hungry drivers jockey for position at a filling station on Santa Barbara Avenue in Los Angeles during the oil crisis. Photos courtesy of UCLA Library Department of Special Collections' Los Angeles Times Photographic Archive.
At first, it looked like a triumph for OPEC and a calamity for the rest of the world. The monarchs and dictators who headed most of the OPEC states enjoyed gigantic cash windfalls, which they used to make their families and supporters fabulously rich, and to buy shiploads of expensive military hardware. Just when the money seemed to be running out, the OPEC economies were rescued by the Iranian Revolution in 1978-79, which led to a another doubling of prices and a second oil shock.
How long were oil-producing countries able to reap big rewards?
By 1982 most of these new surpluses had evaporated. When oil prices collapsed in the mid-1980s — thanks to new supplies from the North Sea and elsewhere — so did most of the oil-rich economies. Mexico defaulted on its foreign debt. The Soviet Union, which relied on oil for 80 percent of its hard currency earnings, entered a terminal economic crisis. In the OPEC states, most of the gains from the 1970s were erased. Half of them remain poorer today than they were at their peak in the 1970s.
You have said that maintaining petroleum wealth can actually turn into a curse for developing countries. Was that the case here?
Definitely. In some oil-rich countries, the shock led to protests, coup attempts and, in Iran, a revolution. In others, it led to the entrenchment of dictators like Libya’s Moammar Gadhafi and Iraq’s Saddam Hussein. When the rest of the developing world was swept by a democratic wave in the 1980s and 1990s, almost all of the oil-backed dictatorships survived intact. Even the Arab Spring left most of them unscathed; only Libya’s Gadhafi was dislodged, thanks to NATO’s military intervention.
What was the immediate impact of the oil crisis on U.S. environmental policy?
A man stands outside his gas station in Chinatown, Los Angeles, between two signs, one in English and another in Chinese.
It fostered a belief that the world was running out of oil. President Jimmy Carter warned that oil wells “were drying up all over the world.” In the space of just a few years, Americans went from believing that oil would remain cheap forever to believing it would soon run out.
Even though the science behind this forecast was shaky, Washington’s response was surprisingly bipartisan. President Nixon pushed emergency conservation measures through Congress, including a nationwide 55-mile-per-hour speed limit. President Ford signed legislation that established mandatory fuel economy standards. Carter urged Americans to treat the energy crisis as “the moral equivalent of war” and pushed for both conservation and greater reliance on solar energy, coal and ‘synthetic’ fuels made from coal and shale.
As a result, federal research funds for energy and conservation rose seven-fold from 1973 to 1979. The remarkable growth in shale gas production in the 2000s can be partly traced to these and other federally backed programs, which led to technological breakthroughs in gas mapping, drilling and fracturing.
Nevertheless, we continue to pour all kinds of carbon into the atmosphere. So how lasting were any of these environmental benefits?
Here’s the great irony. None of these policies were designed to reduce carbon emissions — in fact, the study of climate change was still in its infancy. Yet on balance, the conservation and research policies triggered by the oil shock have done more to curb our carbon emissions than any policies since.
The most important change has been the deceleration of total carbon emissions: Before 1973, U.S. emissions were rising almost four and a half percent annually; since 1973, they have risen less than 0.4 percent a year. At a global level, growth in total carbon emissions went from just under 5 percent annually before 1973 to less than 2 percent annually since then.
The cumulative effects of this deceleration have been staggering. In 2012, the world emitted a record 35.6 billion tons of carbon dioxide. If carbon emissions had continued to rise at their pre-1973 pace, they would have totaled 112 billion tons — more than three times this amount.
Current emissions are still unsustainably high and must be decreased to keep the planet habitable. Still, achieving those reductions is now possible. Without the 1973 embargo, they might not be.
Does this mean we should be thanking the Arab members of OPEC for enacting the 1973 embargo?
In an odd way, yes. Today the OPEC states are widely seen in the West as environmental villains, since they supply the world with fossil fuels and try to block international accords on climate change. But humanity owes the Arab members of OPEC a debt of gratitude: Without the 1973 oil crisis these countries helped trigger — and that ultimately caused them more harm than good — we would be a lot worse off today.