The Energy Story

  Energy Is Born
  Energy Types
  Energy Changes
  Energy Generation

The Energy Problem

  Conservation of Energy
  Aging of Energy
  Finite Resources
  The Oil "Crisis"
  Energy Pollution
  Discussion Topics

The Energy Solution

  Conserving Electricity
  Appliance Efficiency
  Heating Conservation
  Renewable Energy

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Teacher Guide

About the Author

Secret Lives Title - The Energy Problem

The Oil "Crisis"

There are only a few countries that are energy independent, which means that they can produce all of the energy that they need or use. The United States, for example, imports or buys a significant amount of the oil that it uses from other countries. This means that the United States is dependent on these other countries for a large part of its energy needs.

Economics and Politics

The price of energy is controlled by the economics of supply and demand. Usually as the demand goes up or the supply goes down, the price goes up. And even if you can afford to pay the higher price, that extra money spent on energy means that you don't have that money to spend on something else.

A number of the countries that have the largest oil supplies or reserves have formed into a group called OPEC, the Organization of Oil Exporting Countries. OPEC meets regularly and controls the amount of oil that they will export or sell to other countries. In this way, they can influence or set the price they get for the oil that they sell. OPEC shut off the flow of oil significantly in the 1970s, which led to the so called "energy crisis" or "oil crisis." During this period, gasoline prices soared and there were long lines at the gasoline pumps. At one point gasoline was being rationed, where some people could only buy on odd numbered days and the rest on even numbered days.

A large amount of the world oil reserves reside in Arab countries in the Middle East. Political situations could arise in the future where they might refuse to sell their oil to us at any price, leading to another "energy crisis." Cutting off the oil would not only affect our ability to drive our cars, but would have a significant effect on our entire economy, throwing the country into a recession or even a depression.

Balance of Payments

As you can see from the graph below, the United States has been importing more and more of its oil over the last 50 years. While our oil consumption has risen (black line), the amount of oil that we produce internally has dropped (red line). This means that the amount of oil we import has increased (blue line).

US oil consumption, production, and imports graph
Courtesy of Economic Energy Report by Michael Hodges


Not only are we becoming more dependent on foreign sources of oil for energy, but we are paying vast sums of money to buy the oil. This has caused the United States to run huge balance of payment deficits for many years. This means that we pay more for imports from overseas than they buy exports from us. Essentially this means that our dollars are going overseas and that we owe these nations for the oil that we have purchased. This has possible negative long-term effects on our economy.