Europe faces the Russian version of the Arab oil embargo

Morning light lights the landfall facility of the Nord Stream 1 Baltic Sea pipeline and the transfer station of the OPAL gas pipeline, the Baltic Sea Pipeline Link, in Lubmin, Germany, Thursday, July 21, 2022. The operator of the major pipeline from Russia to Europe says natural gas has started flowing again after a 10-day shutdown for maintenance. (AP Photo/Markus Schreiber)

You may recall the 1973-74 Arab oil embargo, and not favorably. The United States learned a lesson from the embargo and took steps toward becoming energy independent. Now that Russia has decided to hit the European Union (EU) with a mini-natural gas embargo, though it isn’t using that terminology, the EU is having to learn a similar lesson, quickly.

Developments leading up to the Russian natural gas embargo of the EU are quite similar to those that preceded the Arab oil embargo.

As the U.S. State Department explains the history, “During the 1973 Arab-Israeli War, Arab members of the Organization of Petroleum Exporting Countries (OPEC) imposed an embargo against the United States in retaliation for the U.S. decision to re-supply the Israeli military and to gain leverage in the post-war peace negotiations.”

Other nations that supported Israel were also included in the embargo, which banned oil exports to the sanctioned nations.

The issue today is the U.S. and EU’s support for Ukraine (as opposed to Israel in 1973) after Russia’s brutal invasion. In response, Russia has temporarily stopped or reduced natural gas flows to the EU countries.

Of course, one difference between today and 1973 is that the United States still wanted and needed crude oil from the Arab countries, which were willing to forego some revenue from reduced oil sales. By contrast, the U.S. and the EU are voluntarily reducing their natural gas purchases from Russia, in part because Russia uses those revenues to pay for its war.

The Arab oil embargo led to long waiting lines at service stations, significantly higher prices for gasoline and other items, and a loss of U.S. leverage in international affairs.

President Nixon responded by announcing an effort to increase U.S. oil production, though oil reserves available through the then-current extraction technology were declining. Fortunately, diplomatic efforts ramped up, and by March 1974 the embargo came to an end.

Even so, Congress became concerned and passed legislation to create the Strategic Petroleum Reserve and the CAFÉ standards (i.e., mandates that cars and trucks hit certain miles-per-gallon goals) and prohibited crude oil exportation. The goal was to achieve U.S. energy independence.

But then in 1978 Congress took a wrong turn and passed the National Energy Act, which increasingly focused on mandating or subsidizing various types of alternative energy sources. But while the costs and subsidies grew over the next few decades, the alternative energy sources didn’t, at least not much.

The United States did eventually achieve energy independence, or close to it, but only in 2019 or 2020. And it wasn’t from the widespread expansion of renewable energy, because it still isn’t widespread.

Rather it was the fracking revolution, combined with horizontal drilling, beginning in the mid-2000s that opened vast new U.S. fossil fuel reserves. Those advances allowed us to produce enough natural gas and nearly enough oil to meet our own needs, and to become the world’s leading exporter of liquified natural gas (LNG). And it meant we were no longer an energy hostage to other nations bent on punishing us for our foreign policy decisions.

The European Union did not learn that lesson. Even though it was encouraged to embrace the fracking revolution, it never really did.

President Trump pressed Germany to back off the Nord Stream 2 pipeline, which would have made Germany and the EU even more dependent on Russian natural gas. Germany dismissed the recommendation, until the Ukraine invasion.

While France has continued to embrace nuclear power, which emits no carbon, Germany started shuttering its nuclear power plants after the Fukushima incident in Japan.

But most EU countries have turned to renewable energy (wind and solar power), boasting of their clean energy and Earth-saving bona fides, even as they quietly relied on Russia to supply them with the fossil fuels they needed.

Now, the EU is enduring the Russian version of the Arab oil embargo, in large part because it spurned multiple warnings over several years that Russia could and would use Europe’s energy dependence against it.

The EU is trying to ramp up fossil fuel production, including restarting and supplying coal to shuttered electricity generating plants.

The EU may experience gas lines, and millions of its citizens may have to endure part of the coming winter without heat. Already, Berlin is turning off lights to some monuments and historic buildings to conserve energy. We don’t know yet what challenges Europe will face.

But one thing does seem clear: The EU countries will finally learn the lesson of the Arab oil embargo.

Merrill Matthews is a resident scholar with the Institute for Policy Innovation in Dallas, Texas. Follow him on Twitter @MerrillMatthews.

Tags fracking Israel Nuclear power OPEC Russia Russia-Ukraine war Russian energy ban Russian oil embargo

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