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Here we go again

Ho-Hum, oil prices have doubled in the last six months. Been there, done that. Time to do it again. The first crisis I can remember was in the early 70s. OPEC was angry at the US for something and reduced output to spite us. Fortunately at that time, OPEC wasn't too united, and their output soon came up and prices were reduced.

Chicken Little

It was during that period that I had gotten my first calculator with scientific numbers. Until then, calculators (with the exception of the $395 HP scientific) did not allow entry or display powers of ten. This meant that you would have to enter 1 microfarad as .000001 farads for calculations. My new TI calculator would allow you to enter 1 ^-6 farads. I soon went around looking for uses of this new toy I had. I found it in Time Magazine.

A Time Magazine article on the oil crisis had maps of the world with the proven reserves, in hundreds of millions of barrels, and oil usage by country, in millions of barrels per day. With my new toy, I was able to calculate the total reserves in the world and the total daily usage. These numbers allowed me to predict the amount of time left before we ran out of oil. The United States, I remember was using about 18 million barrels a day, roughly 60% of the total daily usage in the world.

The map showed that if the United States only used domestic oil, we would run out of in about 15 years. The vast majority of proven reserves were in the Persian Gulf, which explained why OPEC could control pricing. Even with the gulf countries the map showed that the world only had about enough oil for about 30-50 years.

In 1974, I was asked to speak at a power conference in the Beverly Hilton Hotel. At the same location there were senate hearings on oil prices. While at the bar, I engaged some oil company people into conversation. I asked them if it was true that we would be out of oil in the beginning of the next century. They smiled and said yes. I was shocked. "It is true!" I thought.

I became like Chicken Little. "The Oil is over, we must find new sources of energy." I shouted. When Jimmy Carter started his alternative sources program, I was all for it. I would tell all who would listen that by 1990 we will be feeling the loss of oil and be paying enormous prices. They laughed. They were right.

Around 1980, we had another price spike. OPEC was again angry. This time I started to get ready. I put a coal-burning stove in my living room and heated my house with coal. Looking back now, I really don't know how I did it. I built a coal bin on the side of my house, and every day during the winter, I would carry at least one five-gallon bucket full of coal into the house. I also would have to carry buckets of ashes out. Still I felt very patriotic. I was saving my country's oil.

Eventually we redid the living room and threw out the stove. It really was too messy, what with ashes all over. Of course there was no shortage of oil either. Prices continued to drop as OPEC was defeated again.

Looking back, the cause of lower oil prices is obvious. They didn't come by accident. The government put restrictions on the average mileage a car company's fleet must get. It also enacted a "Gas Guzzler" tax. This caused Detroit to design cars for maximum fuel efficiency. Soon the US was down to about 10 million barrels a day. The 300 cubic inch V8s became a thing of the past. Smaller, lighter cars with more efficient engines, became the rage.

Exploration offshore, and into Alaska, produced the Alaskan fields and the North Sea fields. Geologists roamed the earth discovering new oil, raising the proven reserves another 50 years. Still with the exception of the Alaskan fields, the most oil discovered was in the Persian Gulf or Russia.

Happy Days

Soon happy days came back. Oil prices continued down until last year they hit an all time low of $13 a barrel. US citizens were ready to take advantage of this. In 1999, SUVs outsold the passenger cars. Average mileage for them is probably around 10 mpg. The government, however, turned its back, and allowed manufacturers to declare them trucks, thus being immune to auto mileage limits and guzzler fees.

This and increased air traffic has our oil usage again approaching 20 million barrels a day. The maximum oil output in the US today, is less than 10 million barrels a day. This means that we are dependent upon the oil countries of the world to make up our short fall.

The Cycle Starts Again

Americans feel that low oil prices are entitlement. Well they are not. It will take the US quite some time to once again overcome OPEC. I suspect that we will witness Deja-Vu all over again. The higher oil prices will cause people to buy more fuel efficient cars. Geologists will start drilling in previously environmentally protected areas such as Anwar Alaska, http://www.anwr.org/features/forbes.htm . Eventually usage will go down and US production will go up.

My plan is to stand pat. I refuse to return to my coal stove (I have switched to gas heat). Nor will I buy an SUV. I am not going to complain. I figure in about two to three years the US will have overcome this problem. Hopefully before we go into a recession.

Frank Greenhalgh
AKA: Chicken Little
March 14^th, 2000

Comments Frank's column hit a nerve and the responses we are receiving are proof of that. Read the comments as well as Frank's response

About the Author

Frank Greenhalgh has been working in power supplies and systems for 38 years. He has many impressive accomplishments and patents. Over the years he has made significant contributions to Trio Laboratories where he held the position of Chief Design Engineer and was then promoted to Vice President.