A Sudden Oil Shortage?
The US currently imports some 1.3 million barrels of oil or nearly seven percent of our daily consumption from Venezuela. You may not have noticed this, but the Venezuelan President is currently having a row with the US over a number of issues ranging from our alleged attempts to overthrow him to his claims against the oil companies for back taxes. From time to time he threatens to stop selling his 1.3 million barrels to the US each day.
There are of course many other events out there which could impede our 14 million barrel per day of oil imports. With the world’s oil supply/demand equation in more delicate balance than most realize, our relationship with Venezuela is only one of a number of situations that could bring an interruption in US oil imports.
Now a reduction in supply of six or seven percent of our daily oil consumption may not sound like much, but remember, your neighborhood gas station is at the very end of the supply line. Numerous other organizations such as the Defense Department, public safety folks, transit companies, truckers, and chemical manufacturers, or nearly anybody with a long-term contract will have a better claim to their full share than the guy driving up to a gas pump.
At the first sign of trouble, people naturally will start to horde gasoline in anticipation of still further shortages. Every available container will contain a stash and car tanks will be kept full as time in the gas lines permits. There will be misallocations with large gas stations on the interstate having plenty of gas for the dwindling number of interstate travelers while the neighborhood commuter stations will be completely out.
As in the 1970’s, government intervention will have to take place to mitigate the situation, otherwise there will be anarchy at the pumps or at least massive wastes of time and idling engines. Government intervention can range from the simple imposition of odd and even days to reduce the gas lines to the more drastic plans which could be some version of the World War II gas rationing system. The big difference is that this time the shortage would not clear up in a few weeks or years, but will continue for as long as demand exceeds supply or the oil age ends.
A few weeks ago, the International Energy Agency (IEA) in Paris released a study called “Saving Oil in a Hurry” in which they examined what the oil importing countries could do should there be an interruption in supply. This 165-page document looks at previous oil shortages — the two in the 1970’s and some recent ones in Europe — to develop recommendations as to what governments should do when there is more demand at the pumps than there is gasoline available.
They conclude that the overriding concern during a government intervention is to hurt the economy as little as possible. The study emphasizes that there are important differences between measures simply restricting travel, such as a Sunday driving ban, and those that assist or encourage motorists to cut fuel use such as car-pooling or the concept, unknown here in America, of “ecodriving” (light foot on gas).
The major cost associated with fuel storage is lost mobility and the reduced economic activity that results.
After much thought, the IEA came up with seven general approaches that would produce savings of energy(in a hurry):
Increases in public transit useage.
• Increases in car-pooling
• Telecommuting (working from home)
• Changes in work schedules
• Driving bans and restrictions
• Speed limit reductions.
There can, of course, be endless details to these general approaches to saving transportation energy and the savings garnered by each of these approaches will depend on how they are implemented. There is a big difference between a car-pool publicity campaign and expansion of strictly enforced HOV to all lanes of all major arteries and the denial of parking to single occupant vehicles.
The publication of internationally agreed set of approaches to saving transportation energy at least gives us a basis for discussion on the day when the real shortage arrives.
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