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Oct 15, 2013

40 Years Back, 40 Years Forward

What the 1973 Arab oil embargo taught us about energy efficiency, innovation, and moving to a fossil-free future


Forty years ago, 1973, Elvis sang Aloha from Hawaii, the first global concert satellite broadcast. Bobby Riggs and Billie Jean King faced off on the tennis court in the Battle of the Sexes. And The Exorcist terrified theater-going audiences across the country. Then in October the Arab oil embargo hit and the bottom fell out of the American economy, fueled largely by fossil fuel imports from the Middle East.

Today, in 2013, we are approximately halfway between the Arab oil embargo of 1973 and the fossil-free future RMI envisions by 2050 in Reinventing Fire. There are both similarities and differences in what happened in the 70s and what is happening today. The main impetus for conserving energy four decades ago was our lack of access to oil and the realization we should not depend on foreign imports. Now, forty years later, instead of a fuel crisis, we have a climate crisis. We recognize the environmental urgency of curbing our fossil fuel use as we never have before. Hopefully, we can learn from what we went through 40 years ago to help us get to where we want to be 40 years from now.

Crisis spurs innovation

As author Daniel Jack Chasan wrote in the Seattle Times, “When the price of energy quadrupled, industry started substituting other things—insulation, efficiency, ingenuity.” The crisis of the oil embargo spurred innovation.

Congress formed the Department of Energy, bringing most federal energy activities under one umbrella, and providing the framework for a comprehensive national energy plan. Two Senators founded the bipartisan Alliance to Save Energy to promote energy efficiency. Fuel efficiency standards were adopted for auto manufacturers resulting in a doubling of the average new car’s fuel efficiency. More efficient refrigerators, light bulbs, windows, and air conditioners came to market. Insulation sales soared. Numerous energy policies regarding conservation and efficiency were enacted, including the Energy Reorganization Act of 1974, Energy Policy and Conservation Act of 1976, Energy Conservation and Production Act of 1976, and National Energy Act of 1978.

And Jimmy Carter, after his famous fireside cardigan-sweater chat urging Americans to conserve energy, put solar panels on the White House.

The net effect? Oil imports fell 50 percent (from 1977 to 1985) and brought about a culture of conservation unheard of in previous decades. Unfortunately, once the gas lines disappeared and oil prices dropped, some of these efforts were abandoned. In the following decades dependence on foreign oil increased, SUVs gained popularity, and Ronald Reagan removed the solar panels from the White House.

Confronting the new crisis

Yet we learned that in a crisis, the nation can do what it takes to reduce our energy consumption. Today, while we no longer have an artificial shortage of imported fossil fuels, we have melting glaciers, rising sea levels, and a warming planet. It’s time to take the innovation that occurred in the 1970s to a new level as we face today’s crisis—climate change.

We’re already on the way, thanks in part to some of the efficiency initiatives and innovation that came out of the 70s. Today’s appliances require less than half the energy they did four decades ago. Heating systems are now 20 percent more efficient. The past couple of decades have seen a renewed interest in solar and wind power. Global wind power capacity has grown from 18 GW in 2000 to 282.5 GW today. Over the past five years alone, global installed PV capacity grew by 900 percent.

U.S. car manufacturers, who were being outdone by Japanese companies faster to bring fuel-efficient cars to the American market in the late 1970s and early 1980s, are making not only more fuel-efficient cars, but a plethora of electric cars. And some of today’s American-made fuel-efficient cars are modeled after the unsuccessful 1970s cars Detroit produced in response to the oil crisis (with some improvements, of course!). Yet we still have a way to go.

Applying the lessons to reinvent fire

As we saw during the late 1970s and early 1980s, and then the energy efficiency backslide of the late 80s and 1990s, government mandates can only go so far, and progress can stall or even reverse as political climates, market dynamics, and other factors shift. People’s memories only go so far as well—as soon as oil prices dropped and gasoline lines dwindled, the energy crisis seemed forgotten. But we don’t have to forget; in fact, we can forge ahead with as much determination and opportunity as before.

And forged ahead we have: by 2009, America was making a dollar of real GDP using 60 percent less oil, 50 percent less total energy, 63 percent less directly used natural gas, and 20 percent less electricity than in 1975. But we have further to go.

In Reinventing Fire: Bold Business Solutions for the New Energy Era we laid out a roadmap for getting the U.S. off fossil fuels by 2050 while supporting a 158 percent larger economy. The Reinventing Fire solution relies on business taking the lead, as the economic case for moving to efficiency and renewables is so strong—saving $5 trillion, and achieving internal rates of return from 17 to 33 percent in buildings, industry, and transportation.

Looking ahead to the next 40 years—or in the case of RMI’s Reinventing Fire scenario, 37 years to 2050—we need to remember the lessons from the 70s. We cannot be complacent in our move towards efficiency and renewables. We must realize that we are once again facing a crisis, and we need to act.

Jimmy Carter’s words, said in his cardigan by the fire, are as relevant today as ever: “Twice in the last several hundred years there has been a transition in the way people use energy… we must prepare quickly for a third change, to strict conservation and to the use of . . . permanent renewable energy sources, like solar power.”

“We must not be selfish or timid if we hope to have a decent world for our children and grandchildren,” he continued. “By acting now, we can control our future instead of letting the future control us.”

Images courtesy of National Archives.


Showing 1-2 of 2 comments

October 17, 2013

the USA still imports and Burns through $1 Billion a day in OIL. It take more electricity to refine the OIL than you could drive on that energy. I drive Electric and car pool and only charge off peak when there is excess in the GRID that gets dumped if not used! I also have solar to help the utility during Peak Hours.
My favorite transportation is my bicycle. also an ELF from OrganicTransit.com for cold or rainy days

October 18, 2013

This article is a welcome historical perspective on our energy conundrum, and a reminder that much can be done to transition away from fossil fuel dependency. It is important to note, however, that climate change is by no means the only incentive for making this costly transition. An equally grave and overlooked danger in the near term is that of oil supply shocks, caused not by an embargo as it was in the 1970s, but rather by instability in producer countries in the Middle East. In fact, it is already happening in countries like Libya, Sudan and Nigeria, and is causing oil supplies to tighten even as US oil production surges. If major instability were to affect the larger producer countries such as Saudi Arabia, it would send oil prices shooting upward, including in the US. This would impact all aspects of the global economy, because oil still accounts for over 90% of transport fuel. Growing oil and gas production from shale has led to complacency and overly optimistic predictions of US energy independence, when in fact we are a long way from that in oil. Meanwhile, we are forgetting that oil is a global market and Americans would be impacted as much as anywhere else were oil prices to surge. Meanwhile, there is no contingency plan and no readily available substitutes. Given the geopolitical situation in the Middle East, with Syria in disintegration and the threat of neighboring countries being affected, not to mention the equally dangerous situation of the Iranian nuclear program, greater turmoil could easily impact oil markets. So it is not simply the spectre of climate change that should motivate us to act quickly to get off oil; it is also the very real threat of another oil supply shock, which could prove even more devastating than that of the 1970s.

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