Oil Shock by Bini Elisabetta Garavini Giuliano Romero Federico

Author:Bini, Elisabetta,Garavini, Giuliano,Romero, Federico
Language: eng
Format: epub
Publisher: I.B. Tauris

Conclusion

It may be possible to overstate the significance of the 1973 oil crisis to the technological trends in the industry in the 40 years since, but there is no gainsaying the immediate and huge impact that the shock of 1973 had on propelling oil companies into new territorial and technological frontiers. The new supplies discovered as a result gave oil firms and oil-consuming nations a measure of independence from OPEC. Today’s expanding supply of oil and gas from offshore and deepwater provinces, such as the deepwater ‘Golden Triangle’ of Gulf of Mexico–Brazil–West Africa, the growing interest in the hydrocarbon potential of the Arctic, and the dramatic shale plays that are emerging around the world can all trace their legacy back to the industry’s technological response to the shock of 1973.

The industry’s development of non-OPEC oil sources, combined with the other pillars of the new global structure oil created in the wake of the OPEC revolution, has made our dependence on oil, in security terms, less problematic than much of the commentary on the fortieth anniversary of the shock would have us believe. OPEC nations now provide only 20 per cent of US oil imports, which make up only 40 per cent of US consumption. Globally, the influence of OPEC decisions on oil trading, in both the physical and futures markets, has been steadily declining.56 The world is less vulnerable – although not invulnerable – to supply disruptions than it was in 1973. Even more important, the world is less threatened by the concentrated control over oil, such as by the International Petroleum Cartel prior to 1973, or by the relatively small number of oil exporters in OPEC immediately after 1973.

The sudden rebalancing of this control through a wholesale transformation in the ownership of oil in 1973 was what created the shock. The global oil system today is not liable to undergo a similar transformation. Compared to 1973, it is more integrated, with a much wider array of producers, consumers and types of hydrocarbons. For now, the question may be less about whether supply can keep up with demand, and more about whether we have too much supply, too large a carbon budget, to keep from altering the global climate in destructive ways.

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