Over a Barrel

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Ready for oil shock?

A decade after the Arab oil embargo caused panic at the nation's gas pumps and sent the price of oil soaring from $3 per bbl. to more than $20, U.S. reliance on imported oil has scarcely dropped.

In late 1973, when the five-month embargo began as a direct result of the October War, oil imports totaled 36% of U.S. consumption, or 6.2 million bbl. per day; last August, imports reached 35.7%, or 5.97 million bbl. How would the nation fare today if Arab leaders deliberately turned off the tap, or if the fields were damaged, or if some other unpredictable trauma occurred? Many experts share the view of Henry Schuler, who directs energy and security studies at Georgetown University. Says he: "I don't think we're better off at all."

That may strike consumers as too gloomy a view, since the world is currently awash in a glut of oil that, according to some experts, may continue for a decade or more. The 1973 embargo and the 1979 supply interruption that followed the Iranian revolution helped spur reductions in demand and a spate of conservation measures. Despite a decade's growth in population, total domestic oil consumption today (15 million bbl. per day) is even lower than the level of 1973, an achievement not anticipated then. Autos made by the big three domestic manufacturers averaged roughly 12 m.p.g. in 1973; today, that figure is closer to 24 (still short of the Government's target for 1983 of 26). In 1973, the U.S. relied on OPEC for 48% of its imports; today, only 30% of the nation's imported oil comes from OPEC.

Even so, the U.S. continues to draw on nonrenewable fuels (petroleum, gas and coal) for 90% of its energy needs, not much below the 94% of 1973. The price and supply of oil worldwide remain very delicately balanced. Despite a frenzy of oilfield drilling set loose by oil decontrol, domestic production has actually slipped to 8.65 million bbl. daily, compared with 9.2 million in 1973. Now 30% more coal is being burned, but production of domestic natural gas declined by 18% in the decade. After six years, Washington's planned strategic petroleum reserve of 750 million bbl., which equals 90 days of oil imports, is only 44% filled.

Last week the Energy Subcommittee of the House Government Operations Committee, chaired by Oklahoma Democrat Mike Synar, hotly debated whether the Reagan Administration has made, or intends to make, adequate plans for a future oil shock. At issue was a "what if" exercise conducted over an eight-week period this spring by the International Energy Agency (IEA), a 21-nation group created to coordinate worldwide responses to future oil crises. The high-stakes exercise began with a simulated telegram sent by the IEA secretariat in Paris announcing that 8 million bbl. daily had vanished from world pipelines. Reason: a hypothetical blockage of the Strait of Hormuz (not too farfetched in light of the three-year-old Iran-Iraq war) and sabotage of Nigerian oil facilities.