This week, the United States faces down the looming deadline for extending its debt ceiling, a line in the sand that economists say could have dire consequences for our nation’s and the world’s economy if the U.S. defaults on its credit obligations. With the federal government shut down for nearly two weeks on top of it all, and animosity-ridden partisan gridlock as bad as anyone can remember, it will be a plague on both our houses if we cripple our own economy.
But 40 years ago this week, the U.S. battled another economic crisis, one brought about not by political ineptitude but by the inherent insecurity and instability of our fossil-fueled energy system.
Starting on October 16, 1973, the Organization of Arab Oil Exporting Countries announced a total oil embargo against the United States, and OPEC announced a 70 percent overnight increase in the per-barrel price of oil for our western European allies. By December, that price spike hit 130 percent. Meanwhile, OPEC also announced incremental decreases in production output. The U.S. economy—thirsty for and dependent on that oil—went into shock, with a stock market crash and one of the deepest recessions the nation had weathered before or since.
If there was a silver lining, it was that the embargo prompted the U.S. to make real strides toward energy efficiency, from our autos to our appliances. The external influence of OPEC and the artificial energy shortage it imposed forced our hand.
Today, it’s easy for such fossil-fuel-cum-energy scarcity to feel a thing of the distant past. Indeed, in recent weeks media reports from TIME magazineTIME magazine to the New York Times have been awash in stories of energy abundance, including from fossil fuels such as oil and natural gas. (See related, “U.S. Edges Saudi Arabia, Russia, in Oil and Gas.”) Decreasing demand for and more efficient use of oil are stabilizing its price and availability, at least for now, while domestic fracked natural gas makes energy independence seem a tenable position for the U.S. and the nation’s dependence on Middle Eastern fossil fuels a potentially fading memory.
Yet there are signs that despite this seeming fossil fuel abundance we are in the midst of a potential exodus from those fuels, not forced by an OPEC, but rather proactively by choice. Consumers and institutions are turning away from fossil fuels via divestment, such as with 350.org’s Fossil Free divestment campaign aimed at college and university endowments. EVs—in both automaker offerings and consumer adoption—are gaining an increasing foothold in the marketplace. Renewables are increasingly competing with fossil-fuel-generated electricity on economics…with and without subsidy, with new wind and solar beating new natural gas in some markets, wind and solar leading new capacity additions, and renewables earning more new investment globally than incumbent fossil fuels. And growing numbers of communities, cities, and even countries are embracing a 100 percent or similarly high-percentage renewable energy future.
To be sure, the transition is far from a foregone conclusion. We have a long way to go. But our motivations are deep and many, from the economics to the security to the abundance of renewables. The big 350-parts-per-million elephant in the room, however, is of course global climate change. It is an urgent crisis precipitated, not by a cabal of countries jacking prices and restricting the production and exports of fossil fuels, but rather our society’s incessant, addictive burning of those fuels.
The fallout of the 1973 oil embargo, and the efficiency and other developments that came from it, were a first chance to set this nation on a new clean, prosperous, and secure energy path. We failed to see that transition fully through, and now we face a day of reckoning in climate change. It is a reckoning of our own making, but unlike 1973 when OPEC was the puppeteer pulling strings, we are today empowered to define the terms of our own self-imposed fossil fuel exile.
The Intergovernmental Panel on Climate Change’s most recent report confirms that the consequences of unabated climate change are dire and makes clear that we must not continue to burn fossil fuels as we have. (See related “Quiz: What You Don’t Know About Climate Science.”) Efficiency to curb consumption and then replacing that consumption with clean renewable energy is by necessity our path to follow. Whether mandated by national governments, adopted en masse by consumers, or led by progressive businesses and market-based innovation and solutions, we must abandon oil in particular and fossil fuels more generally.
Ironically, whereas prices spiked back in late 1973, fossil fuel prices would likely drop precipitously this time around. Why? The carbon bubble. The idea is not new: we assume that the world’s reserves of oil and other fossil fuels will burn some day, sold for a market price, whether $90 or $110 or $150 a barrel; but if climate change instead dictates that those reserves cannot be burned, they become worthless stranded assets.
The U.K.-based Carbon Tracker Initiative has put numbers to this hypothetical in its landmark report Unburnable Carbon 2013: Wasted Capital and Stranded Assets. CTI estimates that up to 80 percent of the world’s fossil fuel reserves are unburnable if we’re to get global atmospheric carbon dioxide concentrations back below 350 parts per million and constrain carbon emissions to avert catastrophic climate change of two degrees Celsius. All of that primarily oil and coal amount to a $6 trillion carbon bubble, CTI’s estimate of what fossil fuel companies will spend over the next ten years turning fossil fuel deposits into reserves we cannot afford to burn.
This new dawning era of self-imposed fossil fuel exile need not replay the economic and societal hardship of 40 years ago. We are not at the mercy of OPEC. We can be masters of our own energy destiny. With 40 years of hindsight, we owe it to ourselves to embrace the path ahead and capture the economic, societal, and environmental opportunities it offers.
In the Bible, 40 is a number of significance: Moses led the Jews through 40 years wandering the desert in exile, Noah endured 40 days and nights of flood, and Jesus spent 40 days tested in the wilderness. Such periods are both times of trial and transformation. They are precipitated by crisis, defined by reflection and change, and ultimately usher in a new paradigm. That new paradigm—efficiency and renewables—is before us if we adopt it, not by force, but by choice.