The 1974 Oil Crisis and How It's Still Haunting Us Today

Businesses attempting humour during the energy crisis of 1974. (Source: Picryl).

PART 1: Understanding the Oil Embargo and Crisis of 1974 It was 1974, and the world was in the midst of an energy crisis that would change the course of history. The oil embargo that year was a wake-up call for the world, highlighting the dangers of relying too heavily on oil as an energy source. It was a pivotal moment that brought into sharp focus the need for alternative sources of energy, and yet, almost 50 years later, we're still grappling with many of the same issues. So, what happened back in 1974, and what can we learn from it today?

The roots of the 1974 oil crisis can be traced back to the early 20th century when the Middle East started to become a major oil producer. The rise of OPEC, the Organization of the Petroleum Exporting Countries, in the 1960s and early 1970s gave the region a dominant position in the global oil market. This allowed OPEC to exert significant influence over the price of oil, and in 1973, they flexed their muscles by announcing an oil embargo.

The embargo was a direct response to the United States' support for Israel during the Yom Kippur War. OPEC members, led by Saudi Arabia, decided to cut oil exports to the United States and other countries that supported Israel, causing oil prices to skyrocket. The embargo had an immediate and dramatic impact on the global economy, leading to a period of inflation, recession, and unemployment.

The effects of the oil crisis were felt around the world, but they were particularly acute in the United States. Americans were forced to wait in long lines at gas stations, and some gas stations even ran out of fuel. The price of gasoline tripled, and there were widespread shortages of heating oil. The crisis sparked a wave of panic and fear, as people realized how dependent they were on oil for their daily lives.

A police officer in Portland, controlling traffic at a gasoline station that was limiting its sales to only two gallons per customer in December, 1973. (Source: Wikimedia Commons).

To make matters worse, the crisis coincided with a time of economic stagnation in the United States. The country was still reeling from the Vietnam War and the Watergate scandal, and the economy was struggling to grow. The oil crisis only compounded these problems, pushing the country deeper into recession.

The crisis also exposed the vulnerability of the global energy system. Until that point, most countries had relied on a handful of oil-producing nations to meet their energy needs. The crisis showed that this was an unsustainable model, and that a more diversified energy mix was needed.

Smoke from the burning of old auto batteries. Houston, 1972. (Source: Wikimedia Commons).

In response to the crisis, governments around the world started to invest heavily in alternative energy sources such as wind, solar, and nuclear power. The crisis was a catalyst for change, prompting a shift away from oil towards a more sustainable energy future.

Fast forward to today, and we find ourselves facing many of the same challenges. The world is still heavily dependent on oil, and the global energy system remains vulnerable to supply shocks and price spikes. Climate change has added another layer of urgency to the issue, highlighting the need to transition to a low-carbon energy system.

The lessons of the 1974 oil crisis are as relevant today as they were back then. We need to invest in alternative energy sources, diversify our energy mix, and reduce our dependence on oil. We need to be proactive in our approach to energy policy, rather than reactive. If we don't, we risk repeating the mistakes of the past and finding ourselves in the same situation all over again.

PART 2: The Current Energy Crisis and its Drivers The world is once again facing an energy crisis, and this time, it's driven by a different set of factors. While the 1974 oil crisis was primarily a supply-side shock, the current crisis is driven by a combination of supply and demand-side factors. So, what's causing the current energy crisis, and what can we do about it?

One of the primary drivers of the current energy crisis is the COVID-19 pandemic and the Russo-Ukrainian War, both presenting unique challenges for addressing the energy crisis. The pandemic caused a massive drop in demand for energy, as businesses shut down and people stayed home. This led to a glut of oil on the market, which in turn led to a sharp drop in prices. Many oil-producing countries were forced to cut production in order to stabilize prices, but the damage had already been done.

Subsequently, the war in Ukraine has led to a continued disruption of natural gas supplies to Europe, which has until recently relied heavily on Russian gas. This has highlighted the need for Europe to diversify its energy sources and reduce its dependence on Russian gas.

Another factor driving the current energy crisis is the ongoing transition to a low-carbon energy system. Many countries, particularly in Europe, have set ambitious targets for reducing greenhouse gas emissions. This has led to a shift away from fossil fuels towards renewable energy sources such as wind and solar power. While this transition is a positive development from a climate perspective, it has also created new challenges for the energy system.

While renewable energy sources are the future, they are also currently intermittent, meaning that they only generate electricity when the wind is blowing or the sun is shining. This can create a mismatch between supply and demand, as energy is needed at all times, not just when the weather is favorable. This has led to a need for new energy storage technologies, such as batteries, to help balance the energy system.

Wind turbines of Teesside Wind Farm at the North Sea - seen from Seaton Carew, England, 2018. (Source: Wikimedia Commons).

Finally, geopolitical tensions are also playing a role in the current energy crisis. The United States and Europe have imposed sanctions on countries like Russia and Iran, which has limited their ability to export oil and gas. This has created a gap in supply, which has further exacerbated the mismatch between supply and demand.

So, what can we do about the current energy crisis? One solution is to further invest in alternative energy sources such as wind and solar power, which can help reduce our dependence on fossil fuels. We also need to invest in energy storage technologies, such as batteries and hydrogen fuel cells, to help balance the energy system.

A photovoltaic power station in Hawaii, 2017. (Source: Wikimedia Commons).

Another solution is to promote energy efficiency, which can help reduce demand for energy. This can be achieved through measures such as building codes that require energy-efficient buildings, and incentives for businesses and households to invest in energy-efficient appliances and equipment.

PART 3: Potential Solutions to the Current Energy Crisis As we've seen, the current energy crisis is driven by a complex set of factors, including the COVID-19 pandemic, war, the transition to a low-carbon energy system, and general geopolitical tensions. While the challenge is significant, there are potential solutions that can help us address the crisis and create a more sustainable energy system for the future.

One potential solution is to increase investment in renewable energy sources, such as wind, solar, and hydroelectric power. Renewable energy sources are becoming increasingly competitive with fossil fuels, and in many cases, they are now cheaper than traditional sources of energy. By investing in renewable energy, we can reduce our dependence on fossil fuels, which are finite resources and a major source of greenhouse gas emissions.

Another solution is to invest in energy storage technologies, such as batteries and hydrogen fuel cells. These technologies can help balance the energy system by storing excess energy when supply exceeds demand, and releasing energy when demand exceeds supply. By investing in energy storage, we can ensure that renewable energy sources can be used effectively, even when the wind isn't blowing or the sun isn't shining.

In addition to these technical solutions, there are also policy solutions that can help address the energy crisis. Governments can implement measures to promote energy efficiency, such as building codes that require energy-efficient buildings, and incentives for businesses and households to invest in energy-efficient appliances and equipment. Governments can also implement carbon pricing mechanisms, such as a carbon tax or cap-and-trade system, which can help incentivize the transition to a low-carbon energy system.

Industry also has a role to play in addressing the energy crisis. Many companies are already taking steps to reduce their carbon footprint, such as investing in renewable energy and improving energy efficiency. However, more needs to be done, particularly in sectors like transportation and heavy industry, which are major sources of greenhouse gas emissions. Companies can also invest in research and development to help bring new energy technologies to market, such as advanced battery systems and carbon capture and storage technologies.

Finally, individuals can also play a role in addressing the energy crisis. By making small changes to our daily habits, such as turning off lights when we leave a room or using public transportation instead of driving, we can help reduce our energy consumption and carbon footprint. We can also put pressure on our governments and companies to take more ambitious action on climate change and the energy transition.

The current energy crisis is a complex challenge that requires a multipronged approach. We need to invest in renewable energy sources, energy storage technologies, and energy efficiency measures, while also implementing policy mechanisms like carbon pricing. Industry as well as individuals have a role to play in addressing the crisis. By working together, we need to create a more sustainable energy system for the road ahead - one that is resilient to geopolitical tensions and can help us achieve a carbon-neutral future.