WASHINGTON — Washington.--Recall Project Independence?
It was in February 1974. President Nixon proposed it to "re-establish our capability for self-sufficiency in energy" by 1980. He planned $10 billion in federal funding over the next five years and called for "an acceptable pattern of world trade in petroleum."
At the time, the United States imported slightly more than a third of its oil. Today, imports account for 46 percent of the nation's oil supply. And, suggests Earl Ross of the American Petroleum Institute, by the end of this decade America may be importing as many as six barrels of every ten it consumes.
There's another "ominous" trend in prospect. The Arab-dominated Organization of Petroleum Exporting Countries, which after the Arab oil embargo played a declining role in world oil trade, is making a comeback. OPEC now supplies about 40 percent of world oil production, compared with 30 percent in 1985. And if some forecasts are accurate, it will again be providing half the world's oil output by the end of the next decade -- just about the same share as in 1973.
What's more, three-fourths of the world's proven oil reserves are in OPEC countries; two-thirds are in the Middle East.
Such findings, say Edward Fried and Philip Trezise in a new Brookings Institution book, "Oil Security: Retrospect and Prospect," suggest the United States and other industrial nations -- indeed, the world in general -- may become increasingly vulnerable to supply "disruptions."
It was exactly 20 years ago this month that Arab oil-exporting nations, responding to an Israeli invasion of Arab territory, announced a cutback in oil exports. They then imposed an embargo against the United States and three other countries. World supplies fell by more than 5 percent and prices quadrupled.
fTC The U.S., which in 1972-1973 had racked up a more than 5 percent-a-year economic growth rate, plunged into a recession from which it did not recover until 1976. Inflation jumped to the 9 percent range.
Western industrial nations, as a group, suffered an estimated 2 to 3 percent loss in economic output in 1974 because of the Arab cutbacks. And poorer developing countries were on their way to the 1980s "debt crisis."
Clearly, the world was unprepared for the 1973 oil shock, and even though the industrial nations by 1974 created the International Energy Agency to help cushion future oil setbacks, another shock in 1979 still more than doubled world oil prices. The agency also has been criticized for failing to act quickly to prevent a sharp oil-price rise during the 1990-1991 Persian Gulf crisis.
Basically, though, the world energy outlook is much more reassuring than 20 years ago. For one thing, notes Helga Steeg, the IEA's executive director, oil plays a smaller role in industrial nations. Twenty years ago it accounted for about 54 percent of their energy consumption against 42 percent today.
Also, there's more spare oil production capacity, thanks partly to greater non-OPEC production. In addition, member nations of the International Energy Agency now have more than 1.2 billion barrels in strategic stockpiles.
The short- and long-term oil-price outlook is for relative stability, says Ann-Louise Hittle of Cambridge Energy Research Associates. It looks more like a buyer's market, she suggests. And the recent Israeli-Palestine Liberation Organization accord offers more optimism for a relatively peaceful Middle East.
But, caution Mr. Trezise and Mr. Fried, "oil and deep-seated roots of political instability in the Middle East are a dangerous mixture." They don't rule out future oil shocks, from, say, an insurrection in Saudi Arabia or Iranian adventurism or even another Iraq-Kuwait invasion.
The International Energy Agency itself, they note, remains a less than proven agent for dealing effectively with oil-supply interruptions. Only three of its 23 member governments -- the United States, Japan and Germany -- own or control more than 80 percent of the agency's strategic oil stocks. That raises the prospect of disharmony among members suddenly faced with an emergency.
Moreover, the IEA's plan for member countries to "share" the oil burden by reducing imports in case of a serious shortage remains untested. And there's the rest of the world -- specifically, the oil-importing developing countries, which are taking a steadily increasing share of the world's traded oil. They now buy nearly one-third of all world oil imports.
The fast-growing Asia-Pacific region raises special questions. Consider, for instance, the impact on world supplies once most of China has turned in its bicycles for cars.
But, who knows, by then the great American public may be driving electric-powered limousines.
Richard Lawrence is senior correspondent for the Journal of Commerce in Washington.