Robert Stobaugh and Daniel Yergin, "After the Second Shock: Pragmatic Energy Strategies," Foreign Affairs, Spring 1979.

 

Summary

 

 

This article discusses the problem of rising amount of oil imports entering the U.S.  This article was written during the second oil shock of the 70s.  It outlines the need for the United States to decrease the rate at which it imports oil from OPEC countries. 

 

 

Introduction:

 

 

Five years after the 1st oil shock the 2nd began.  The upheaval of Iran has meant an interruption of supply and loss to the world’s production.  OPEC countries are further increasing prices, and America has been importing more and more oil.  In 1971 25% of the United States oil came from imports, but in 1979 50% has come from foreign imports.    Britain, China, Norway, and Mexico are the only foreseeable sources of oil in the future, and that accounts for only small amounts of the world oil production.  OPEC dominates the oil market and Saudi Arabia dominates OPEC.  The world has become dependent on the unstable governments of the Middle East.  With U.S. becoming more dependent on the OPEC, U.S. foreign policy will soon be dictated more and more by OPEC countries.  The current predicted rise in U.S. consumption over the next ten years could only be fueled by imports because domestic production is not sufficient.  A pragmatic approach to this rising dependence is needed. 

 

Oil Solutions

 

Oil companies have their own solutions to the problem.  They suggest stimulating production through deregulation of oil prices and speedy granting of offshore oil right.  They also call for incentives for unconventional approaches such as extraction of shale oil.  A large portion of oil is left behind with conventional approaches.  Opponents of the big oil companies suggest the breaking up of large companies in order to stimulate competition.  In reality these solutions offer little help.   Shale drilling is expensive and new large oil deposits are unlikely.  There also is no evidence that suggest breaking up large oil companies will lead to increase in domestic supply.  In theory there is no domestic oil solution.

 

Natural Gas

 

Natural gas accounts for 25% of United States energy.  It is almost all domestically produced.  The uncertainties surrounding feasible levels of natural gas are greater than oil.  There are not enough reserves to maintain the current level of production over ten years.

 

 

 

 

Coal

 

There is serious debate around the externalities of using coal.  Coal provides 18% of U.S. energy.  It is the United States most abundant fossil fuel.  Coal is very dirty.  It pollutes immensely with a very high cost of abatement.  Coal production capability has also declined greatly in the past half century, and we are not currently capable of producing enough energy from our coal supplies.

 

Nuclear

 

Nuclear Energy has many externalities also.  With current technology waste is hard to dispose of, and there are many doubts concerning the safety of nuclear energy.  Because of these doubts nuclear energy has seen a recent decline in popularity and use.

 

Solar

 

Solar energy only accounts for a small percentage of United States energy.  Government policy favors big solar regulated by power companies to that of more practical small solar.  Current strategies being researched by government aren’t very practical.  Solar energy devices are very expensive, and there is just not enough government support for the issue.

 

Conservation

 

Conservation is becoming more common in the United States, but there is still much room for improvement.  Methods used in Europe such as congeneration are not currently used in the United States.  Congeneration is using steam produced by factories as energy instead of waste.  Great amounts of energy can also be conserved through more energy cautious designs of buildings.  The government must stimulate conservation through incentives.  It does not have to be true that conservation hinders productivity.

 

Conclusion

 

Recommendations for Balanced Energy Policies

  1. Strict environmental regulation on offshore leasing.
  2. Decontrol of new oil, and oil produced by enhanced recovery methods.
  3. Government assistance for new supply technologies.
  4. An attempt by government to find new ways to dispose of nuclear waste.

 

The balanced energy policy is designed to work with our current government structure.  These recommendations might not be the most efficient but they are the most politically workable for a short run solution.  These solutions do not apply the solar and conservation because currently these solutions are not politically feasible.  They face to many hurdles in government.  It is necessary to begin to revamp our energy policy so in the long run these safer renewable solutions can be a practical solution.

 

 

Summary by Shaun Hillin