Almost exactly five years after the first oil shock, the second began. The parts of the puzzle are arranged quite differently this time around, but the two central pieces are the same. The upheaval in Iran has meant an interruption of supply and a loss to world production already as great as that from the 1973 embargo; the tight world oil market which had been predicted, just last fall, only for the mid-1980s or beyond is already upon us. And, as a direct result, the OPEC countries-which in December 1978 had already announced a substantial price rise during 1979-are further increasing prices.
It is, of course, too soon to say whether this second shock will be as great an earthquake as that of 1973-74. But it has certainly dramatized anew how great is the insecurity that results from the United States depending to the present degree on the Middle Eastern producers. It also reminds us again how it is the "accidents," which cannot be put into an economist's equation, that reshape the market.
Within the United States, this second shock should bring to an end what had become an increasingly powerful tendency to pronounce the energy crisis a thing of the past, to discount the possibility of a second shock and instead to project scenarios depicting a glut of oil on the world market. In particular, it spotlights the steady rise in American oil imports, from 25 percent of consumption in 1971 to the current level of about nine million barrels per day (mb/d)-almost half of U.S. oil consumption. Here is the key contradiction of U.S. energy policy-that while the declared goal has been to hold steady or decrease oil imports, they have kept rising. This increase has been watched with dismay by other Western nations, who see this growth accentuating trends that pose fundamental threats to their well-being. Their stands and actions on other issues, such as nuclear weapons proliferation and the dollar, are directly related to their perception
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