This month marks the 40th anniversary of the Organization of the Petroleum Exporting Countries embargo against the United States and states that supported Israel after Egypt and Syria initiated simultaneous offensives against it on Yom Kippur in 1973. While it’s not an anniversary that many will celebrate, it’s a good opportunity to reflect on how much more secure our energy situation is, despite our continued heavy reliance on fossil fuels.
Most commentators have focused, with good reason, on the West’s greatly enhanced ability to withstand similar shocks were they to occur today. Equally important, although generally overlooked, is the reality that OPEC has no incentive or real ability to inflict them on the world.
Go to OPEC’s website and you will be greeted not by articles remembering the havoc the organization caused in the name of Arab unity 40 years ago, but by a banner touting “Communication and cooperation.” That much of the Western world is remembering the embargo this week, while OPEC makes no mention of it, is not an effort by the organization to disguise its latent power and ambitions. Rather, it is almost inconceivable that OPEC would start such an embargo today.
Why? First, the 1973 embargo, for all the bedlam it caused, didn’t work. The stated goal was ending Western support for Israel in the Yom Kippur War, and that didn’t happen. Second, the global political landscape has changed remarkably. What issue would inspire OPEC — and Saudi Arabia in particular — to take such measures against the U.S. and its other closest allies? The fault lines in the Middle East are much less stark than in 1973, when no Arab country had yet made peace with Israel.
While we cannot rule out “black swan” events, the two most explosive issues in the Middle East don’t even pit Israel against its Arab neighbors. Saudi Arabia’s biggest concerns in the region are Syria and Iran. The Saudis, although unsuccessful, actually sought to garner Arab support for U.S. strikes against Syria in the wake of the Bashar Assad regime’s use of chemical weapons.
Iran, and its pursuit of a nuclear weapon, is an even greater source of Arab unease. One hopes a sound and enduring solution can be found through negotiations, such as those just held between Iranian and Western diplomats in Switzerland. But if not, although Arabs may not cheer the use of American (or even Israeli) force against Iran, many will see it as preferable to living with a nuclear-armed regime in Tehran.
Third, the most powerful OPEC members don’t want to see huge spikes in oil prices. There are still “price hawks” within the organization: countries such as Iran and Venezuela, which see a higher price of oil as their only path to greater revenue, given constraints on increasing their production. But OPEC as a whole learned some powerful lessons from the 1973 embargo. The 1980s oil glut, and the correspondingly low oil prices, was directly related to the price spikes of 1973 and 1979. This contributed to the “stagflation” that plagued Western economies and tempered their demand for oil.
The 1973 crisis also launched widespread efforts in the West to find and develop “non-OPEC” oil, to increase energy efficiency, and to bring alternative sources of energy online. OPEC has no self-interest in tanking the fragile economic recoveries of today with high oil prices — or in further catalyzing the already vigorous pursuit of non-oil energy sources.