I thought it might be good to post some History revisited regarding previous "Oil Crises" in order to give us a sense of comparison for a possible oil crisis from Y2K. You will note that we had a defined period of 5 months of an oil embargo that began in October of 1973 as a result of the Arab-Israeli War. You'll note that oil shot up from nearly $5.00 a barrel to just under $13.00 per barrel during that crisis. The next crisis came in 1979 even before the Iranian Hostage crisis began. It continued until 1981 when Saudi Arabia began to flood the market with cheaper crude oil (undercutting its OPEC partners). It peaked at just under $40.00 per barrel. The next crisis came with the Persian Gulf War when prices shot up again to nearly $35.00 per barrel. Note the sequence of events in the listings below. There is a price chart on this link, but it would not take my cut and paste in this posting. Visit the link to see the graphic chart.

It's very helpful to read how these crises developed. I've been looking for official numbers stating just how large the percentage of oil became. Unfortunately, I cannot find the statistics I wanted. I do know that Opec reduced its oil production by 25%. If the world lost 25% of oil supply today the effects would be expected to be at least the same as that of 25+ years ago. In subsequent posts, we'll look at further DOE analysis of some key oil exporting nations as we head towards CDC. Data from U.S. DoE and EIA World Oil Price Chronology: 1970-1998 http://www.eia.doe.gov/emeu/cabs/chron.html#a1973 The 1973 Arab Oil Embargo lasted only 5 months. http://www.eia.doe.gov/emeu/cabs/chron.html Oct 19-20 Saudi Arabia, Libya, and other Arab states proclaim an embargo on oil exports to the United States. Oct 23-28 Arab oil embargo extended to the Netherlands. Nov 5 Arab producers announce 25 percent cut in production below September levels. Further cuts of five percent are threatened. Nov 18 Arab oil ministers cancel the scheduled 5 percent cut in production for EEC. Nov 23 Arab summit conference adopts open and secret resolutions on the use of the oil weapon. Embargo extended to Portugal, Rhodesia, and South Africa. Nov 27 President Nixon signs the Emergency Petroleum Allocation Act (EPAA). Authorizes petroleum price, production, allocation and marketing controls. Dec 9 Arab oil ministers announce a further production cut of 5 percent for January for non-friendly countries. Dec 22-24 OPEC Gulf Six decides to raise the posted price of marker crude from $5.12 to $11.65 per barrel effective January 1, 1974. Dec 25 Arab oil ministers cancel January 5 percent production cut. Saudi Arabian oil minister promises 10 percent OPEC production rise. 1974 Jan 7-9 OPEC decides to freeze posted prices until April 1. Jan 29 Kuwait announces 60 percent government participation in BP-Gulf concession; Qatar follows on February 20. Feb 11 Washington Energy Conference opens. Attended by 13 industrial and oil producing nations. Called by U.S. to resolve the international energy problems through economic cooperation among nations. Henry Kissinger unveils Nixon Administration's seven-point "Project Independence" plan to make the U.S. energy independent. Libya nationalizes three U.S. oil companies that had not agreed to 51 percent nationalization in September. Feb 12-14 Heads of state of Algeria, Egypt, Syria, and Saudi Arabia discuss oil strategy in view of the progress in Arab-Israeli disengagement. Mar 18 Arab oil ministers announce the end of the embargo against the United States, all except Libya. 1979 Jan First emergency Crude Oil Buy-Sell Program allocations. Jan 16 Shah leaves Iran on vacation, never to return. Bakhtiar government established by the Shah to preside until unrest subsides. Jan 20 Saudi Arabia announces drastic cut in first-quarter production. 9.5 MMBD ceiling imposed. Although actual cuts never reach announced levels, spot prices of Middle East light crudes rise 36 percent. Jan 20 One million Iranians march in Teheran in a show of support for the exiled Ayatollah Komeini, fundamental Muslim leader. Feb 12 Bakhtiar resigns as prime minister of Iran after losing support of the military. Mar 5 Iran resumes petroleum exports. Spring Gasoline shortage/world oil glut. Mar 26 OPEC makes full 14.5 percent price increase for 1979 effective on April 1. Marker crude raised to $14.56 per barrel. May DOE announces $5 per barrel entitlement to importers of heating oil. Saudi Arabia announces intention to increase direct sales and to sell less through Aramco. Both announcements send prices higher. Jun 1 Phased oil price decontrol begins. Involves gradual 28 month increase of "old" oil price ceilings, and slower rate of increase of "new" oil price ceilings. Jun 26-28 OPEC raises prices average of 15 percent, effective July 1. Oct Buy-Sell Program sales average more than 400,000 B/D from October 1979 through March 1980 - highest level since February 1976, due to emergency allocations. Oct Canada eliminates light crude oil exports to U.S. refiners, except for those exports required by operational constraints of pipelines. Nov 4 Iran takes western hostages. Nov 12 Carter orders cessation of Iranian imports to U.S. Nov 15 Iran cancels all contracts with U.S. oil companies. Dec 13 Saudi Arabia raises marker crude price to $24 per barrel. 1980 Mar 1 Windfall Profits Tax enacted. May Saudi Light raised to $28.00 per barrel, retroactive to April 1. Apr-Sep Buy-Sell Program allocations drop to average of 120,000 B/D for period April to September 1980. Sep 17 Iraq breaks 1975 treaty with Iran and proclaims sovereignty over Shatt al-Arab waterway. Sep 23 Iraq invades Iran. Mutual bombing of installations. Nov 10 Iraq captures southern port of Khorramshahr. Nov 20-24 U.N. gulf war mediator Olaf Palme makes first unsuccessful peace shuttle between Tehran and Baghdad. Dec Collapse of OPEC's pricing structure. Saudis use $32 per barrel marker, others use $36 per barrel benchmark. 1981 Saudis flood market with inexpensive oil in 1981, forcing unprecedented price cuts by OPEC members. In October, all 13 OPEC members align on a compromise $32 per barrel benchmark. Later, benchmark price is maintained, but differentials are adjusted. Jan Iraq repels first major Iranian offensive. Jan 28 President Reagan lifts remaining domestic petroleum price and allocation controls originally scheduled to expire in September 1981. Apr After meetings in Baghdad and Teheran, attempts by nine Islamic Conference leaders to mediate peace between Iraq and Iran fail. Aug Windfall profits tax reduced. Sep 27-28 Iran defends its besieged port of Abadan, driving back Iraqi forces. Oct OPEC reaches an agreement to unify crude price at $32 per barrel through 1982 and sets an ultimate price ceiling of $38 per barrel. Nov 29 Major Iranian offensive mounted on central front. 1982 Indications of a world oil glut lead to a rapid decline in world oil prices early in 1982. OPEC appears to lose control over world oil prices. Mar Damascus closes Iraq's 400,000 bbl/d trans-Syrian oil export pipeline to show support for Iran. Mar 11 U.S. boycotts Libyan crude. May 24Iran recaptures Khorramshahr. Jun Iran demands $150 billion in war reparations; pledges war until Iraq's Hussein stands trial. Jun 10 Iraq declares unilateral cease-fire. Jul 13 Iran launches first attack into Iraq. 1983 Oil glut takes hold. Demand falls as a result of conservation, use of other fuels and recession. OPEC agrees to limit overall output to 17.5 MMB/D. OPEC agrees to individual output quotas and cuts prices by $5 to $29 per barrel. Apr

-- R.C. (racambab@mailcity.com), December 12, 1999

Answers

my eyes are blurry, whats the bottom line ? I've been expecting major oil problems by 1/00 for some time now.

-- Dan g (earth_changes@hotmail.com), December 12, 1999.

R.C.

Thanks for the Oil postings, excellent work if I may say so. I've just been reading some of your old "stuff", and especially your initial post to this forum "Oil/Gas are the real problems in y2k?"...

My question - do you still stick with your initial assessments? From that post your BOTTOM LINE read...

"Expect a near complete stoppage in crude oil on Jan 1, 2000"...

DD reed also said that the crisis would hit no later than the third week in January.

What are your feelings now on this? Do you agree with Harry Schultz that oil will go to $50 by the end of this month, and 75-100% more by the end of this month? I personally, with all this information available to the oil industry, cannot understand why the price is not MUCH higher now, bearing in mind that these highly paid analysts MUST know the risks...

What gives? Any thoughts here R.C.???

-- Andy (2000EOD@prodigy.net), December 12, 1999.

Correction...

"Harry Schultz that oil will go to $50 by the end of this month, and 75-100% more in 2000"...

-- Andy (2000EOD@prodigy.net), December 12, 1999.

Andy,

You asked me: "My question - do you still stick with your initial assessments? From that post your BOTTOM LINE read...

"Expect a near complete stoppage in crude oil on Jan 1, 2000"...

DD reed also said that the crisis would hit no later than the third week in January.

What are your feelings now on this?

--------- My response -------

I'm still not sure and no one is as to how things will play out, but I'm still hearing assessments that indicate lots of things may go wrong straight from the get-go. I'm not sure about DD and the third week scenario. I'm inclined to go with my first hand sources who think there are real possibilities for shut downs on 1-1-2000. It may be that the full impact won't hit til later in January for many operations though. Still, I suspect most elements that regulate and control processes that do go haywire will do so in those first few hours in the rollover. No one, though is sure about anything. Most are very, very, very nervous until the TV cameras come on. Then they get the Ronald McDonald happy face meal look. Or better yet the Alfred E. Newman "what, me no worry" look and spin mode.

----------------

You also asked: "Do you agree with Harry Schultz that oil will go to $50 by the end of this month, and 75-100% more by the end of this month?"

My response:

Well, I don't see it hitting $50.00 before rollover. Not unless we get some pre-rollover accidents first, either in the oil industry or else where but I'm not an oil price expert. My guess, is that it might run on up to about $30.00 but probably just fluctuate about where it is til at least Christmas.

I think it's in the interests of the Gov't and industry to keep the price from spooking the masses into a premature panic. So everyone is really playing it as if nothing is wrong.

-- R.C. (racambab@mailcity.com), December 12, 1999.

Please format this stuff to make it readable: --Short sentences --Short paragraphs --Bullets or similar spacing

These aging eyes would be grateful.

-- cgbg jr (cgbgjr@webtv.net), December 12, 1999.

Thanks RC, I tend to echo your views regarding the price. I think DD was referring to the fact that existing supplies will pretty much have run out by the second/third week of january if refineries were unable to process at the normal rate - also. the SPR would not have kicked in by then for a variety of reasons which we've all gone over.

As an aside an Astrologer has predicted severe energy/transportation problems in the USA kicking in by the March/April timeframes, if not sooner!

-- Andy (2000EOD@prodigy.net), December 12, 1999.

Sysops, please delete this post if it's not formatted correctly!

R.C. said:

"I thought it might be good to post some History revisited regarding previous "Oil Crises" in order to give us a sense of comparison for a possible oil crisis from Y2K. You will note that we had a defined period of 5 months of an oil embargo that began in October of 1973 as a result of the Arab-Israeli War. Youll note that oil shot up from nearly$5.00 a barrel to just under $13.00 per barrel during that crisis.

The next crisis came in 1979 even before the IranianHostage crisis began. It continued until 1981 when Saudi Arabia began to flood the market with cheaper crude oil (undercutting its OPEC partners). It peaked at just under $40.00 per barrel.

The next crisis came with the Persian Gulf War when prices shot up again to nearly $35.00 per barrel. Note the sequence of events in the listings below. There is a price chart on this link, but it would not take my cut and paste in this posting. Visit the link to see the graphic chart. Its very helpful to read how these crises developed. Ive been looking for official numbers stating just how large the percentage of oil became. Unfortunately, I cannot find the statistics I wanted. I do know that Opec reduced its oil production by 25%. If the world lost 25% of oil supply today the effects would be expected to be at least the same as that of 25+ years ago.

In subsequent posts, well look at further DOE analysis of some key oil exporting nations as we head towards CDC.

Data from U.S. DoE and EIA World Oil Price Chronology: 1970-1998 http://www.eia.doe.gov/emeu/cabs/ chron.html#a1973 The 1973 Arab Oil Embargo lasted only 5 months. http:// www.eia.doe.gov/emeu/cabs/ chron.html

Oct 19-20 Saudi Arabia, Libya, and other Arab states proclaim an embargo on oil exports to the United States.

Oct 23-28 Arab oil embargo extended to the Netherlands.

Nov 5 Arab producers announce 25 percent cut in production below September levels. Further cuts of five percent are threatened.

Nov 18 Arab oil ministers cancel the scheduled 5 percent cut in production for EEC.

Nov 23 Arab summit conference adopts open and secret resolutions on the use of the oil weapon. Embargo extended to Portugal, Rhodesia, and South Africa.

Nov 27 President Nixon signs the Emergency Petroleum Allocation Act (EPAA). Authorizes petroleum price, production, allocation and marketing controls.

Dec 9 Arab oil ministers announce a further production cut of 5 percent for January for non-friendly countries.

Dec 22-24 OPEC Gulf Six decides to raise the posted price of marker crude from $5.12 to $11.65 per barrel effective January 1, 1974.

Dec 25 Arab oil ministers cancel January 5 percent production cut. Saudi Arabian oil minister promises 10 percent OPEC production rise.

1974 Jan 7-9 OPEC decides to freeze posted prices until April 1. Jan 29 Kuwait announces 60 percent government participation in BP-Gulf concession; Qatar follows on February 20.

Feb 11 Washington Energy Conference opens. Attended by 13 industrial and oil producing nations. Called by U.S. to resolve the international energy problems through economic cooperation among nations. Henry Kissinger unveils Nixon Administrations seven-point "Project Independence" plan to make the U.S. energy independent. Libya nationalizes three U.S. oil companies that had not agreed to 51 percent nationalization in September.

Feb 12-14 Heads of state of Algeria, Egypt, Syria, and Saudi Arabia discuss oil strategy in view of the progress in Arab-Israeli disengagement.

Mar 18 Arab oil ministers announce the end of the embargo against the United States, all except Libya.

1979 Jan First emergency Crude Oil Buy-Sell Program allocations. Jan 16 Shah leaves Iran on vacation, never to return. Bakhtiar government established by the Shah to preside until unrest subsides.

Jan 20 Saudi Arabia announces drastic cut in first-quarter production. 9.5 MMBD ceiling imposed. Although actual cuts never reach announced levels, spot prices of Middle East light crudes rise 36 percent.

Jan 20 One million Iranians march in Teheran in a show of support for the exiled Ayatollah Komeini, fundamental Muslim leader.

Feb 12 Bakhtiar resigns as prime minister of Iran after losing support of the military. Mar 5 Iran resumes petroleum exports. Spring Gasoline shortage/world oil glut.

Mar 26 OPEC makes full 14.5 percent price increase for 1979 effective on April 1. Marker crude raised to $14.56 per barrel. May DOE announces $5 per barrel entitlement to importers of heating oil. Saudi Arabia announces intention to increase direct sales and to sell less through Aramco. Both announcements send prices higher.

Jun 1 Phased oil price decontrol begins. Involves gradual 28 month increase of "old" oil price ceilings, and slower rate of increase of "new" oil price ceilings.

Jun 26-28 OPEC raises prices average of 15 percent, effective July 1.

Oct Buy-Sell Program sales average more than 400,000 B/D from October 1979 through March 1980 - highest level since February 1976, due to emergency allocations.

Oct Canada eliminates light crude oil exports to U.S. refiners, except for those exports required by operational constraints of pipelines.

Nov 4 Iran takes western hostages.

Nov 12 Carter orders cessation of Iranian imports to U.S.

Nov 15 Iran cancels all contracts with U.S. oil companies.

Dec 13 Saudi Arabia raises marker crude price to $24 per barrel.

1980 Mar 1 Windfall Profits Tax enacted. May Saudi Light raised to $28.00 per barrel, retroactive to April 1.

Apr-Sep Buy-Sell Program allocations drop to average of 120,000 B/D for period April to September 1980.

Sep 17 Iraq breaks 1975 treaty with Iran and proclaims sovereignty over Shatt al-Arab waterway.

Sep 23 Iraq invades Iran. Mutual bombing of installations.

Nov 10 Iraq captures southern port of Khorramshahr.

Nov 20-24 U.N. gulf war mediator Olaf Palme makes first unsuccessful peace shuttle between Tehran and Baghdad.

Dec Collapse of OPECs pricing structure. Saudis use $32 per barrel marker, others use $36 per barrel benchmark. 1

981 Saudis flood market with inexpensive oil in 1981, forcing unprecedented price cuts by OPEC members. In October, all 13 OPEC members align on a compromise $32 per barrel benchmark. Later, benchmark price is maintained, but differentials are adjusted.

Jan Iraq repels first major Iranian offensive.

Jan 28 President Reagan lifts remaining domestic petroleum price and allocation controls originally scheduled to expire in September 1981.

Apr After meetings in Baghdad and Teheran, attempts by nine Islamic Conference leaders to mediate peace between Iraq and Iran fail.

Aug Windfall profits tax reduced.

Sep 27-28 Iran defends its besieged port of Abadan, driving back Iraqi forces.

Oct OPEC reaches an agreement to unify crude price at $32 per barrel through 1982 and sets an ultimate price ceiling of $38 per barrel.

Nov 29 Major Iranian offensive mounted on central front. 1

982 Indications of a world oil glut lead to a rapid decline in world oil prices early in 1982. OPEC appears to lose control over world oil prices.

Mar Damascus closes Iraqs 400,000 bbl/d trans-Syrian oil export pipeline to show support for Iran. Mar 11 U.S. boycotts Libyan crude.

May 24Iran recaptures Khorramshahr.

Jun Iran demands $150 billion in war reparations; pledges war until Iraqs Hussein stands trial.

Jun 10 Iraq declares unilateral cease- fire.

Jul 13 Iran launches first attack into Iraq.

1983 Oil glut takes hold. Demand falls as a result of conservation, use of other fuels and recession. OPEC agrees to limit overall output to 17.5 MMB/D. OPEC agrees to individual output quotas and cuts prices by $5 to $29 per barrel. Apr -- R.C. (racambab@mailcity.com)"

-- carpal (I'm@witzend.org), December 12, 1999.

This is a keeper:

"No one, though is sure about anything. Most are very, very, very nervous until the TV cameras come on. Then they get the Ronald McDonald happy face meal look."

LOL!! Thanks R.C.

-- Linda (lwmb@psln.com), December 12, 1999.