Oil Crunch of ‘70s May Return, Experts Warn

Despite plentiful supplies of oil in world markets, some energy experts fear the United States and other industrial nations may relive the shortages of the 1970s as early as the 1990s.

That bleak view emerged in interviews with energy specialists, who were asked to assess where America stands now that energy programs once touted as “the moral equivalent of war” by former President Jimmy Carter are fading into oblivion in the free-market era of President Reagan.

While most said the United States and other nations are better prepared to handle an oil embargo than in the 1970s, some expressed concern about complacency bred of good times.

“Energy is off the front burner (in Congress) because there’s no longer a shortage,” said Louisiana Sen. Bennett Johnston, the ranking Democrat on the Senate Energy Committee.

“The troubling thing is that the condition is not permanent. The so-called energy crisis will return. In fact, it could return with a real vengeance.”

The Senate Energy Committee chairman, Idaho Republican James McClure, says supplies follow boom-to-bust cycles, and he flatly predicts another crisis within nine years.

“We have had an energy supply interruption at intermittent times ever since World War II,” McClure said. “There’s no reason to expect that the future is different from the past.”

Other analysts warned that current low prices were erasing incentives to produce more energy and use it efficiently.

Even so, most said, America is better able to deal with a shut-off of oil imports than it was 12 years ago, when the Arab world closed the spigots during the 1973 Middle East war.

As a result, they said, Reagan’s policy of minimal involvement in energy markets seems right for the times.

“It’s the marketplace where the real action is going on now,” said Harvard Professor Daniel Yergin, who also heads Cambridge Energy Research Associates. “There’s no question that we’re better off, that we have a cushion of security.”

The cushion includes a Strategic Petroleum Reserve with more than 100 days’ worth of crude oil imports and an emergency oil-sharing system among International Energy Agency members.

Also, Yergin said, the non-Communist world, which consumes 47 million barrels of oil a day, could boost production by 10 million barrels daily in case of a sudden supply disruption.

None of those cushions existed in 1973.

Prices soared, panic buying worsened gasoline and other fuel shortages, some businesses closed. Policy makers were baffled.

“Suddenly the country was plunged into a crisis from the embargo and we had nothing,” said Joseph Kasputys, an assistant commerce secretary under former President Gerald R. Ford.

“Neither the Congress nor the executive branch had anyone who knew how gasoline gets to the pump,” said Daniel Dreyfus, who directed the Senate Energy Committee staff in the 1970s.

The first response was appointment of a White House energy adviser under former President Richard M. Nixon’s “Operation Independence.” Next came a Federal Energy Administration set up by President Ford, and finally the present Energy Department created by President Carter in 1977.

These generated a flurry of regulations aimed at cutting consumption and stimulating production, which Reagan and many economists now say made matters worse by stifling competition.

Although many of those regulations originated in the Nixon and Ford administrations, it was Carter who elevated energy to an urgent priority issue as President from 1977 to 1981.

He lectured the country on it, presented Congress with complex legislation and, when the situation worsened after the 1979 Iranian revolution, he issued a call to arms.

“On the battlefield of energy, this democracy is going to make its stand,” Carter said on July 15, 1979. “And on that battlefield, you and I . . . will win the energy war.”

Among his major efforts were research into renewable energy forms, creation of synthetic fuels and the partial decontrol of oil and natural gas prices.

By the time Reagan succeeded him in 1981, the world energy picture had changed dramatically. The price surges of the 1970s sparked increased production and prompted people and industries to use energy more efficiently.

“The real key is that the market worked,” said John Sawhill, top energy adviser to President Ford. “As a result, what seemed an intractable problem became a much lower priority issue.”

President Reagan has tried futilely to eliminate the Energy Department, has speeded up oil decontrol and has cut energy research funds.

Congress is considering his request to halt further filling of oil reserves.