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Oil crisis deja vu
In France, early September saw angry truck drivers and farmers deploying 2,000 large trucks to lay siege to about 70 oil refineries. Their goal was to prevent tanker trucks from delivering gas and create a national fuel shortage.
Cars formed long line at Paris gas stations in hopes of filling their tanks before the fuel ran out.
Crude oil prices rebounded last winter after dropping to an extreme low of less than 10 dollars per barrel. Then the price rise accelerated at a dizzying rate and finally topped the critical 30 dollars-per-barrel level this summer.
In Europe, depreciation of the euro also contributed to the skyrocketing prices of petroleum products--triggering professional drivers, whose livelihood became increasing difficult, to take to the streets in protest.
Six months earlier, kerosene fell in short supply in the northeastern United States. As its price soared, authorities were forced to take countermeasures, including distributing free kerosene to poor citizens.
Twenty-seven years have passed since the first oil crisis of 1973, and the world is now getting a shocking reminder of that long-ago fuel shortage and skyrocketing oil prices.
The October 1973 Yom Kippur War, which triggered the first oil crisis, lasted less than 20 days when the warring parties agreed to stop fighting. The region's oil fields never became a battlefield during the short-lived war.
Nevertheless, a serious panic overtook the world as the oil-producing Arab nations used crude oil as a diplomatic weapon for the first time. They gradually decreased crude oil production and banned exports to Israel's allies.
Panic in Japan Although oil exports to Japan were not prohibited, the negative effects of the decreased production made a direct impact on the nation. The Japanese public became panic-stricken at the thought that the supply of oil--whose abundance had been taken for granted--could just disappear. The so-called toilet-paper panic, which came to symbolizes Japan's first oil crisis, started in late October in Osaka and Kobe, as well as other cities. For the following two months, panicked consumers faced shortages not only of toilet paper but also of laundry detergent and other daily commodities.
The first oil crisis sent crude oil prices, which had been 2 dollars per barrel, to the 5 dollars level, and due to the first oil crisis, they easily exceeded the level of 10 dollars. The second oil crisis, triggered by Iran's Islamic Revolution in 1979, temporarily caused the price of a 30 dollars.
Over the 21 ensuing years, however, the crude oil barrel price remained stable at about 20 dollars per barrel with some exceptions including the days of the Gulf War. Nonetheless, countries around the world strove to end their heavy reliance on oil as a main energy source and the Organization of Petroleum Exporting Countries (OPEC) as chief supplier.
According to the International Energy Agency (IEA), oil supplied 50 percent of the world's energy in 1973, followed by coal at 25 percent, natural gas at 16 percent and 0.9 percent supplied by nuclear power. In 1998, though, only 36 percent was supplied by oil, followed by coal at 23 percent, 20 percent by natural gas and 6.7 percent by nuclear power.
During that period, the world energy demand increased by 11/2 times, but many countries around the world made headway in developing alternative energy sources such as natural gas and nuclear and became steadily less dependent on petroleum.
Japan's dependence on oil as an energy source dropped from 78 percent to 51 percent during the 1973-1998 period, while it has increased its dependence on nuclear power from 0.8 percent to 17 percent. Its dependence on natural gas also increased, from 1.6 percent to 12 percent.
In 1973, the world's daily crude oil production was 58.5 million barrels, with OPEC members accounting for 53 percent of the total, according to BP Amoco. Although world production had increased to 71.89 million barrels per day by 1999, OPEC's share decreased to 41 percent, it reported. The shift is due to the development of many new oil fields in non-OPEC regions such as the North Sea and Mexico.
Mention also should be made of energy-saving efforts. Steelmakers completely stopped using heavy oil in the steelmaking process, while automakers vied with each other in improving the fuel efficiency of their vehicles. In 1999, Japan's daily petroleum consumption was equivalent to 5.65 million barrels a day--just a 3.5-percent increase from the 1973 level. Consumption in the United States and European countries also increased by less than 10 percent.
This is the first time, however, for crude oil prices to soar in times of peace. The direct cause is the shortage of gasoline in the summer and kerosene in the winter in the United States, which lacks sufficient oil refineries. The petroleum-product price hike in the United States seems the culprit behind the increase in crude oil prices. Instability in the Middle East also has added more fuel to price increases.
From a long-term viewpoint, however, other factors also are at work.
Efforts to generate nuclear power, which has been the most effective measure in reducing the world's oil dependence, have been seriously hampered since the 1986 Chernobyl nuclear accident.
The crude oil demand in developing countries also is increasing sharply. China's oil consumption--4.37 million barrels a day--is close to catching up with Japan's, while India's daily consumption has reached 2.01 million barrels.
Thus, those factors behind the more than two decades of stability in the world's crude oil supply and demand since the second oil crises are quickly eroding.
Nuclear fusion, which will supposedly liberate humankind forever from energy worries, seems to have become an ever more distant dream as its technical problems are not easy to overcome.
Although the utmost efforts should be made to develop solar and wind power, which are effective in preventing global warming, they seem unlikely to become major energy sources yet.
For the first half of the 21st century--or maybe longer--we will have to secure our energy needs from a well-balanced combination of various sources, while trying to save even more energy. Nonetheless, the world will inevitably have to turn to oil as its main source of energy. Thus, the political stability of the Middle East, which has the potential to produce even more petroleum, is becoming crucial.
The Club of Rome, which is consists of scientists, business leaders and leading intellectuals from around the world, published "Beyond the Limits of Growth" in 1972, a year before the first oil crisis, warning against economic growth that ignores the limits to supplies of foods and natural resources.
Humankind, which is on the threshold of the 21st century, has yet to find definitive solutions to the problems pointed out by the club.
(From Dec. 3 Yomiuri Shimbun)
-- Martin Thompson (email@example.com), December 02, 2000