In-Depth: How the Russian oil ban compares to the oil shocks of the 1970s

Gas stations during the 1979 oil crisis
Posted at 6:11 PM, Mar 09, 2022
and last updated 2022-03-10 01:23:17-05

SAN DIEGO (KGTV) – With the U.S. imposing a ban on Russian oil in response to the Kremlin’s invasion of Ukraine, some analysts say we’re on track for the biggest disruption to oil markets since the energy crisis of the 1970s.

In that era, San Diegans had to wait in long lines to fill their tanks. The government rationed gas. Prices skyrocketed close to $1 a gallon.

It was the worst oil crisis in U.S. history, and there are parallels to today. The first oil crisis in 1973 started with a war in the Middle East that prompted an embargo, all during a period of high inflation.

But David Victor, an energy expert and professor at the UC San Diego School of Global Policy and Strategy, says there are important differences between the eras.

“Not only do the oil markets function better today, but also our economy is much larger,” he said. “So as a fraction of the pocketbook, we're spending much less on energy than we were during the peak oil price periods of the 1970s.”

Today, the U.S. does not rely as much on foreign oil imports as it did in the 70s, he said. U.S. oil producers generate about 12 million barrels per day compared to about 8.5 million in 1979.

Last year, Russian oil imports accounted for about 3 percent of U.S. supply. The U.S. should be able to rapidly replace that supply with imports from Saudi Arabia, Mexico, Venezuela, Libya, and Iran, Victor said, making 1970s-style shortages at the pump highly unlikely.

“Frankly, I think what we've done here is a move that's symbolic, but will have relatively little practical import to the markets,” he said.

But if European countries were to follow the U.S.’s lead and block their supplies from Russia, that could change the equation.

“If they were to do that, the effects across the global markets would be seismic,” Victor said.

The U.S. imported about 700,000 barrels a day from Russia last year. If European countries joined the ban, it would disrupt about 5 million barrels a day.

That’s on par with the disruptions in the 1970s that set off the oil crisis. The 1973-74 oil embargo removed 4.3 million barrels from the market.

“If that happened, that would shake the markets in a major way and that's why the Europeans are not doing it,” Victor said.