BRACING FOR AN OIL SHOCK : Analysis : There’s a ‘Green’ Side to the Mideast Crisis

What’s the energy outlook for tomorrow and the day after? Hard times followed by hard work.

Higher oil prices will be with us for a good while as Iraq’s President Saddam Hussein demonstrates his chokehold on the world’s energy supplies.

And so the 1990s, which started out to be the environmental decade, will find itself even more conscious of limiting energy use.

But it won’t be easy and no one should be deceived about the economic effects: Every dollar that Hussein pushes up the price of basic energy is a dollar you don’t have for your standard of living.

While lessons may be bitter, sometimes they are learned. And the most hopeful prediction to be made about the 1990s is that industrialized countries will reduce their dependence on Middle East oil, and ultimately oil itself. Iraq’s Saddam Hussein, like Iran’s Ayatollah Khomeini before him, may ultimately break the power of oil by sheer excess.

To be sure, with his troops in Kuwait and menacing Saudi Arabia, Hussein at present represents a threat to world peace. Middle Eastern experts doubted Friday that the Iraqi ruler would invade Saudi Arabia. Rather, they predicted that he would threaten it for the next year or so and try to destabilize the Saud family regime that has run the country since the 1920s. That way he might gain control of the world’s largest oil reserves, while avoiding military confrontation with the United States.

But if Hussein’s aggression has shown the world anything, it is how vulnerable is its oil supply. Also, the tension he has unleashed has sent the price of oil--which influences all energy prices--above $25 a barrel. That’s the price Hussein argued for at the recent meeting of the Organization of Petroleum Exporting Countries. But it’s economically too high a price for a commodity that remains in oversupply.

So politically and economically, Hussein has made exploration for new and alternative sources of oil very attractive. And that should immediately accelerate worldwide exploration--which is why investment markets this week bid up the prices of global oil field service firms, such as Halliburton and Schlumberger.

Moreover, chances are excellent that new supplies will be found as exploration reaches out to new areas of Asia and the Soviet Union. A reassuring fact to keep in mind is that two-thirds of all the oil wells ever drilled are in the United States. So it’s more than likely that oil exists elsewhere, too. Even so, it takes at least five years from exploration to production of a new well, so the world may be beholden to Hussein for a good while yet.

An even bigger story than new oil for this environmental decade will be natural gas, which is in abundant supply in many parts of the world. Environmentally conscious Japan is already the biggest customer for the gas of Indonesia, and it’s likely that production there will be increased rapidly. More Soviet gas will flow to Western Europe.

And the United States, which contains a 50-year supply of producible natural gas at present rates of usage, will move to increase gas production also. The United States also contains 20 billion barrels of oil--a six year supply--even aside from Alaska. So it should be able to maintain current production and hold back greater dependence on Middle East imports for some time.

Increasing production may not be easy, however. In the past five years, as oil prices remained low, U.S. oil companies have gone broke and their skilled employees have scattered. To get equipment and crews together to increase U.S. production significantly these days would take 18 months, says John Watson, an economist for Mitchell Energy & Development in Houston.

But there’s more opportunity than difficulty in energy. An easy prediction for the ‘90s is that work will go forward on acceptable ways to burn abundant American coal or to use nuclear power. Solar energy could finally make serious advances in this decade.

Yet by far the most interesting possibility for the ‘90s is that the advanced industrial nations will finally break their dependence on oil from the violent and primitive Middle East.

The record is reassuring. When oil prices quadrupled in 1973-’74, the industrial nations of Western Europe, Japan and North America began reducing their dependence on oil. Machinery became more efficient, thanks to modern electronics; cars went from getting 10 miles per gallon of gas to 30 mpg. The industrial nations continued to grow in the years after 1973, but they used less energy to do it; in fact, energy use scarcely rose at all in the 1980s.

Now the world is challenged to go further, to devise greater efficiencies of production, to experiment with substitute fuels for automobiles.

The murderous Saddam Hussein is far from a joke, but if you think about it, he’s just given a big push to the Clean Air Act.