The 2010 Deepwater Horizon oil spill has faded rapidly as a focus of public attention, leaving in its wake an important question about energy politics in the United States: What role do crises play in bringing change to the American energy system? This essay considers the relationship between crisis and continuity by examining halting and incomplete efforts to sever the link between oil consumption and American economic growth between 1965 and 1980. In recent years, commentators have looked back to the 1970s and seen in that decade lost opportunities to change the nation’s energy path. Yet those opportunities, upon closer examination, appear fewer and smaller than they seemed at the time and are sometimes described today.
To be sure, Congress passed a great deal of legislation and three successive presidents made energy policy a priority of their administrations. New pollution laws, offshore drilling restrictions, financial reforms, and efficiency measures represented significant breaks from the past. At the same time, however, underlying obstacles, including a national commitment to low oil prices and the enduring conflict between energy producers and consumers, blocked more substantial changes. The political context of the 1970s also diluted and distorted national policy making. The rise of a national environmental movement absorbed anger about oil pollution into a broader set of environmental initiatives, reducing the focus on oil. Public fears about national security resulted in policies, such as promoting new domestic production, that targeted dependence on oil from foreign countries only, rather than petroleum dependency more generally. While striving to reduce imports, the United States simultaneously secured inexpensive oil from overseas by deploying its military in the Middle East. As a result of these contradictory impulses, national political leaders only modestly changed the lockstep relationship between oil and the American economy during the 1970s.
Assessing the significance of 1970s energy reforms from the vantage point of more than thirty years later risks applying an unrealistically high standard for change. Yet understanding the significant limitations of 1970s reforms still helps illuminate why U.S. energy policy has remained stalled and why crises such as the Deepwater Horizon oil spill are likely insufficient catalysts for large-scale change in energy and climate policy. To explore the role that crises played in changing American oil policies, this essay considers U.S. policy efforts after the 1969 Santa Barbara oil spill and the 1973 oil embargo, against the backdrop of the New Deal era in energy. I focus predominantly on national policy—federal laws proposed, passed, and litigated, and the implications of shifting energy policy for America’s dependence on petroleum.
Waning of the New Deal Era in Energy
During the 1960s, longstanding approaches to managing the U.S. oil market remained largely in place. The federal government and state regulatory agencies helped set oil prices nationally by controlling foreign imports and managing domestic production. These market controls kept oil prices from going too high or too low and established a kind of political as well as economic equilibrium. Tax incentives for oil production persisted despite the efforts of liberals such as Senators Paul Douglas and William Proxmire, who deplored what they saw as favoritism shown the oil industry. But as long as oil-state Democrats dominated national politics, reform of tax breaks such as the oil depletion allowance, which permitted oil producers to shelter as much as 27.5 percent of their gross income, stood little chance.1
By the mid-1960s traffic congestion and regional air pollution spurred state-level regulation of motor vehicles, which accounted for nearly 40 percent of U.S. oil consumption. In places such as California politicians tried to redirect state gasoline taxes from funding highways to building mass transit systems. California state politicians also led the nation in regulating vehicle emissions. Nationally, however, the United States took little action on air pollution, fuel efficiency, or mass transit. Americans drove their big cars on a new network of federally funded interstate highways. Early in Lyndon B. Johnson’s presidency, Congress passed laws that increased federal responsibility for clean-air regulation. Yet those national initiatives only established a cooperative framework with little regulatory muscle behind it.2
As Johnson left office in 1969, the equilibrium in oil policy—the political balance between domestic oil producers and refiners and oil importers and consumers—was faltering. A raft of special exemptions allowed different companies and geographic regions to circumvent federal import controls, undermining federal management of the oil market. At the same time, spare capacity in U.S. oil fields was running out, raising concerns about energy scarcity. Oil markets tightened internationally as rapidly rising consumption removed slack from the global oil market. U.S. consumption jumped 51 percent during the decade, just before U.S. oil output peaked. Consuming countries and multinational companies lost power to producing nations, many of which united to form the Organization of Petroleum Exporting Countries (OPEC). Seeking to expand domestic production and raise revenues, the Johnson administration opened new offshore leases in California to development. When Richard M. Nixon became president, his administration faced a delicate political situation soon to be thrown out of balance.3
After the Black Tide and Burning River of 1969
On January 28, 1969, just eight days after Nixon’s inauguration, a Union Oil well off the coast of California blew out. The well spilled tens of thousands of barrels of crude oil over the next eleven days into the biologically rich Santa Barbara channel. The Santa Barbara spill was much smaller than either the 1989 Exxon Valdez accident or the 2010 Deepwater Horizon gusher. But the wealth and political connections of the Santa Barbara community, televised images of oil-soaked birds, and California’s longstanding conflict over coastal drilling assured national attention on the spill. State politicians, Republican and Democratic, demanded drilling moratoria along the coast. Santa Barbara activists organized protest groups such as Get Oil Out (GOO). The environmental movement gained further momentum six months later when Cleveland’s Cuyahoga River, awash in refinery waste and other debris, caught fire. This event, memorialized in Randy Newman’s song, “Burn On,” focused further attention on the nation’s polluted waterways.4
Nor were these isolated incidents. The first six months of 1969 saw nearly one hundred oil spills, ranging from a few barrels to the tens of thousands of barrels spilled at Santa Barbara. Two major blowouts also occurred on offshore platforms in the Gulf of Mexico in 1970. In 1971 a tanker collision dumped 19,000 barrels into San Francisco Bay. Cumulatively, these pollution incidents intensified opposition to new oil and gas drilling and made water-quality protection a national priority. With the Santa Barbara incident fresh in memory, proposals to drill for natural gas in Lake Erie met opposition in the United States, while Canada allowed drilling on its side of the lake. As L. P. Haxby, the Shell Oil Company’s environmental conservation manager and chair of the American Petroleum Institute’s committee on oil-spill cleanup, acknowledged in 1970, “Major oil spill incidents have severely shaken public confidence in the ability of our industry to conduct its operations in a manner that will not harm the environment. Oil spills have cost the industry millions in dollars in production as well as clean-up costs; but such costs are insignificant compared to what these spills have cost us in public confidence and good will.” The industry now faced an increasingly hostile and distrustful public that demanded an end to privileges and benefits that the oil industry had enjoyed for decades.5
New legislation and judicial rulings turned the growing anger at the industry into forceful regulations to reduce oil pollution. The Water Quality Improvement Act of 1970, signed into law by Nixon around the time of the first Earth Day, required the president to publish national contingency plans for the removal of spilled oil. In May 1970 Nixon also asked the Senate to approve treaties that addressed oil pollution by ships at sea and the liability of ship owners for coastal damage from oil spills from tankers. The new Federal Water Pollution Control Act Amendments of 1972 empowered the federal government to regulate the discharge of even relatively small amounts of oil. The Coastal Zone Management Act, also passed in 1972, encouraged states to balance economic and environmental interests, particularly with issues related to coastal energy activities. A Ports and Waterways Safety Act that same year expanded the power of the U.S. Coast Guard to manage vessel traffic and congestion, particularly when it involved oil tankers, and to set safety standards for tankers and waterfront facilities. In signing the Ports and Waterways bill, Nixon called petroleum “the lifeblood of modern-day America” but warned of the risk of “ecological tragedies” such as the 1971 tanker collision in San Francisco Bay. In 1973 the U.S. Supreme Court upheld a new Florida law regulating shippers, oil drilling facilities, and dockside terminals, saying that the states could hold shippers liable so long as state laws did not conflict with federal standards. Writing for a unanimous court, Justice William O. Douglas called oil contamination “an insidious form of pollution of vast concern to every coastal city or port.”6
Hostile attitudes toward the oil industry after Santa Barbara and anger about traffic and air pollution also brought changes to tax policy and transportation finance. With the sweeping tax reform bill of 1969, which simplified aspects of the federal code, Congress reduced the oil depletion allowance from 27.5 to 22 percent. “Those who want to sock it to the oil industry have the bit in their teeth,” one observer commented. Around this same time, Congress also reformed finance policies related to transportation and oil consumption. Decades-old rules stipulated that federal and state gasoline taxes could pay only for highway construction and maintenance. Now these rules came under attack. In August 1973 Nixon signed a law that made Highway Trust Fund money (revenue collected from gas taxes) available for mass transit. States such as California soon followed suit. The 1973 Federal-Aid Highway Act also turned federal attention away from controversial urban highways that neighborhood leaders had resisted in New York, San Francisco, and Los Angeles. At the same time, the new financing schemes effectively tied the fate of mass transit to that of highways. Mass transit funds, allocated in a fixed proportion to the highway budget, could grow only if highway funds did too.7
How much did these post–Santa Barbara spill efforts to reduce oil pollution and reform transportation policy change the oil industry and alter Americans’ relationship with oil? The new environmental laws, which curtailed coastal spills and forced technology improvements, certainly curbed the worst excesses and trimmed waste. They also raised the cost of oil pollution with fines, new insurance requirements, and limits on company practices. New environmental laws delayed some projects, such as the Alaskan pipeline, for years. A moratorium on offshore oil development in California similarly derailed offshore drilling in many locations for decades. These actions limited oil supply and constrained its shipment and processing. The new environmental rules also forced the oil industry to deal with public opposition to pipelines, tanker ports, and offshore wells. Meanwhile, financial reforms reduced tax subsidies for oil production and shifted funds to mass transit.
Despite these changes, however, the new regulations and reforms did not fundamentally alter the country’s underlying dependence on oil. This limited impact resulted in part from the way that the Santa Barbara spill fed into a larger narrative about the environment. Oil pollution was only one of a litany of perceived environmental disasters capturing headlines. Lake Erie was “dying” due to oxygen depletion and algal blooms caused by pollution. Rapid population growth stoked fears of an exploding “population bomb” that would lead to famines and resource scarcities. Earth Day 1970 brought millions of people into the streets on behalf of a wide range of environmental causes. As a result, many legislative victories that followed Santa Barbara broadly addressed environmental problems but had a less specific and tangible impact on the issue of oil. The lack of sustained focus on oil was evident even in the Santa Barbara Declaration of Environmental Rights, written by Santa Barbara environmental activists after the spill. The declaration jumped quickly from discussing oil to advocating the need to change the nation’s environmental consciousness: “We propose a revolution in conduct toward an environment which is rising in revolt against us.” The declaration deplored litter, air pollution, species extinction, and lost open space, and called for a new ethics to “govern man’s contact with all life forms.”8
To many environmentalists, placing oil in the context of a larger environmental crisis seemed a bold political move that would address the fundamental imbalance in the relationship between humans and nature. Yet the shift ironically lessened the political focus on oil consumption and dependency. The discussion of the National Environmental Policy Act of 1969 (NEPA), which created the Council on Environmental Quality and required environmental impact statements for federally approved projects, demonstrates how fast attention shifted from the Santa Barbara spill to broader environmental issues. In February 1969, when Senator Henry Jackson introduced the legislation, he used the oil spill of just a few weeks earlier to illustrate the dangers of pollution and the need for action. Jackson had proposed similar legislation during the previous Congress, and the spill provided a new opportunity. But the Santa Barbara spill quickly vanished from headlines and political discourse. Just two months later, when Jackson held a Senate committee hearing on NEPA, the spill merited only passing reference. Legislators lamented population growth and the threat of new technologies as often as they decried the Santa Barbara incident. They described a sweeping “environmental catastrophe” ruining forests, rivers, and fisheries.9
The legislative victories that flowed from the Santa Barbara oil spill consequently addressed broad environmental issues, of which oil production and processing was but one piece. In the next few years, Congress passed legislation on clean air and water, endangered species, coastal management, and oceanic pollution. Nixon created the Environmental Protection Agency in 1970. The changes profoundly transformed the legal context for economic activity in the United States, but they did not fundamentally change U.S. oil policies. The Santa Barbara spill thus had an important but diffuse impact on environmental law. The spill did not drive the key energy policy proposals of the early 1970s.10
What did drive U.S. energy policies before 1973? The Nixon administration worried principally about tightening oil markets, rising prices, and the need to boost domestic production. Nixon’s oil policy also was caught in a longstanding conflict between producing and consuming states over oil imports. Politicians from New England complained about the oil import system because it raised regional energy costs. Senator Thomas McIntyre, a New Hampshire Democrat, attacked the “secret government of oil,” complaining that the oil import program lined “the pockets of a privileged few giant oil companies at the expense of … consumers.” Northeastern politicians sought unsuccessfully to replace the oil import system, which capped total imports, with a tariff that would permit more oil into the country. Nixon instead capped domestic oil prices in 1971 as part of economy-wide wage and price controls intended to fight rising inflation. The oil price controls, covering both crude oil and petroleum products, continued through the Ford and Carter administrations. Paradoxically, capping oil prices to help consumers encouraged consumption and lowered supply, causing heating oil shortages in the winter of 1972–1973 that deepened the sense of an impending energy crisis.11
As oil imports grew, foreign policy analysts increasingly worried about the nation’s vulnerability to the “oil weapon.” Congressional hearings in the fall of 1972 focused on the “foreign policy implications of the energy crisis.” Oil-exporting countries had “broken the mastery of western oil companies,” the New York Times announced on its front page in April 1973. “We are in a position to dictate prices,” a Saudi Arabian oil minister reportedly told the newspaper. Secretary of Commerce Peter Peterson told a meeting of thousands of oil executives that “no new Presidential initiative coming in 1973” was “more important” than energy. “The era of low-cost energy is almost dead,” Peterson declared, “Popeye is running out of cheap spinach.” The Nixon administration proposed to expand domestic production of oil and natural gas with price incentives, tax breaks, and new oil leases. Nixon also proposed to facilitate imports by encouraging the use of supertankers. The administration considered energy conservation a low priority, viewing it as a threat to economic growth.12
After the Arab Oil Embargo
After the United States sided with Israel in its 1973 October War with Egypt and Syria, Arab countries cut their oil output and refused to sell petroleum to the United States. The Arab oil embargo confirmed policy makers’ worst fears about American vulnerability. During the five-month embargo, oil prices quadrupled to over $12 per barrel. The sudden price surge and supply cut brought energy to the top of the political agenda. Presidents Nixon, Gerald R. Ford, and Jimmy Carter, as well as congressional leaders, all made energy a top priority during the remainder of the 1970s. Yet their legislation and executive initiatives did not add up to coherent action. The United States pursued a hodgepodge of policies, including promotion of nuclear power and synthetic fuels, pursuit of solar energy, development of shale oil and coal gasification, conservation, and encouragement of domestic oil and natural gas production. Almost every competing political interest received support. As a result, federal policies did not greatly change the makeup of the energy market.13
The oil embargo facilitated the passage of laws to boost domestic production, overcoming the political stalemate that had followed the Santa Barbara spill. The embargo also broke a congressional deadlock over the Alaskan pipeline, which had been held up by lawsuits over environmental impact statements and by Alaskan native land claims. Just weeks after the embargo began, a pipeline bill that explicitly barred further judicial review under NEPA sailed through Congress. Pursuing lawsuits to stop drilling also became more difficult. “Judges read newspapers too,” said Carlyle Hall from the Center for Law in the Public Interest, “They know we’ve got an energy problem.” Interior Secretary Rogers Morton called for reopening the Santa Barbara Channel to oil development, citing the “new national interest.” New offshore drilling proposals revealed a growing divide between federal and state interests. The federal government eagerly sought new oil and revenue from California, while state leaders split over the issue. As a result, the federal government offered new offshore oil leases, even though the state government did not.14
The Arab oil embargo also cleared the way for legislation to reduce consumption and allocate petroleum resources. In early November 1973 Nixon sought to reduce future oil consumption by signing the Amtrak Improvement Act. He called “the energy efficiency of rail” a “national interest.” Congress passed a law requiring the president to allocate crude oil and petroleum products through new distribution plans within thirty days. The bill addressed longstanding complaints that certain U.S. regions were being denied their fair share of oil resources. In December Congress passed a nationwide daylight savings law and in January, a measure reducing highway speed limits to 55 miles per hour. The goal of energy conservation justified both measures.15
Congress followed these initial conservation and allocation measures with the important Energy Policy and Conservation Act in 1975, establishing efficiency standards for automobiles and appliances for the first time. It also created a Strategic Petroleum Reserve, an emergency government stockpile of hundreds of millions of barrels of oil, to help the country weather any future supply disruptions. President Ford had proposed relying on market forces to bring the energy market into balance. He proposed decontrolling fuel prices and imposing a $2 per barrel import fee to raise prices, thereby stimulating production and also discouraging consumption. But the Democratic-controlled Congress struck Ford’s legislative text and substituted its own ideas, making clear, as one group of congressmen declared, “its opposition to higher prices as a principal means of inducing conservation.” Nixon and Ford had made significant efforts to address energy issues. Yet when Ford left office in 1977, he noted with disappointment that oil imports had continued to rise during his administration. Despite fears of oil dependence and strategic vulnerability, national policies continued to encourage oil consumption. Oil remained governed by federal price controls, with U.S. prices fixed well below world market levels.16
President Carter announced a new national energy plan in early 1977 to reduce the growth of U.S. energy demand and to cut imports. The plan promised to trim oil use by expanding consumption of coal and unconventional energy sources such as oil shale and solar power, while also reducing demand through energy conservation. Carter called for removing price controls on new oil production to encourage exploration and development, while also imposing a tax that would bring domestic crude oil prices up to world oil price levels. House Speaker Tip O’Neill pushed Carter’s package through intact in five months, but the plan fell apart in the Senate. Many liberal Democrats opposed decontrol of oil and natural gas prices. They feared that price increases would boost industry profits without benefitting consumers. Powerful oil-state Democrats, such as Senate Finance Committee chairman Russell Long of Louisiana, in turn blocked taxes on oil that might offset “windfall” gains that might result from price decontrol when domestic oil prices would rise sharply to the higher world market price.17
Carter’s energy program thus stalled in Congress, undermining his political strength and domestic agenda. It took Carter more than two years to begin to remove controls on oil prices in 1979. The next year Congress passed a modest windfall profits tax on domestic crude oil production to capture a share of the windfall that resulted from the jump to world oil market prices. The tax netted around $38 billion before it was repealed in 1988. Carter had some success in implementing his energy policy. He established a new Department of Energy and expanded funding for nonpetroleum fuels. Carter pushed through mandatory energy efficiency improvements but failed to get congressional support for policies that might have encouraged conservation by raising the cost of energy to consumers. While striving to cut imports, Carter also explicitly declared that the United States would use military force if necessary to protect American access to Persian Gulf oil. In the end, the struggle over oil and natural gas pricing, government controls, and taxes stalled Carter’s energy reform efforts. Stuart Eizenstat, Carter’s domestic policy adviser, later recalled that the administration “never recovered” from the bitter fight over price deregulation, particularly for natural gas. Carter described the experience of dealing with energy politics as akin to “chewing on a rock that lasted the whole four years.”18
Continuity and Change: A Matter of Perspective
The years following the 1969 Santa Barbara oil spill and the 1973 oil embargo saw dramatic changes in U.S. oil policy. Congress and the states reduced tax subsidies for oil production, imposed national speed limits, established fuel economy and other efficiency requirements for the first time, diverted some gasoline tax revenue to mass transit, and significantly tightened environmental regulations. Offshore oil drilling faced new restrictions, the Alaskan oil pipeline was delayed for years, and American troops increasingly safeguarded access to Persian Gulf oil.
Looking back at the 1970s more than thirty years later, however, these policies appear to have only modestly altered American patterns of energy use. Oil consumption grew from 11.5 million barrels per day in 1965 to a peak of 18.8 million barrels per day in 1980. Petroleum consumption then dropped as low as 15.2 million barrels per day in 1983, due to the 1979 oil price shock and the early 1980s recession, a shift by utilities and industry to natural gas and coal, and efficiency improvements. But then oil consumption increased again, rising to over 20 million barrels per day in 2003. The energy intensity of the American economy has dropped since the 1970s, but the nation remains deeply dependent on petroleum.19
Pressures to keep costs low and enhance energy security undermined efforts to reduce oil dependency. Energy security meant boosting domestic oil production by drilling offshore and building a pipeline to Prudhoe Bay, Alaska. By contrast, reducing overall oil dependency meant, in part, cutting domestic output and allowing prices to rise by opposing new developments in Alaska and offshore. American energy policy continued to encourage economic growth with cheap energy, and policy makers protected 1970s consumers with price controls for oil. This national commitment to low-cost oil undermined proposals to use higher costs to spur conservation and innovation. Underlying continuities in U.S. oil politics thus persisted, particularly the tension between domestic producers and oil consumers and importers. Regional differences deepened the conflict. Energy-producing states, such as Texas and Louisiana, vied for policy supremacy with energy-consuming regions, such as the Northeast.
From 1965 to 1980, crises yielded policy innovation, much as advocates hoped, in the summer of 2010, that the Deepwater Horizon spill would facilitate major climate and energy legislation. But the Santa Barbara spill and the 1973 oil embargo did not alter the American relationship with oil—the nation’s thirst for low prices and the entanglement of regional and industrial interests in oil policy. Contradictory policy goals, including the conflict between producers and consumers and the subsuming of energy policy to larger battles over the environment and inflation, undermined a unified and effective national strategy.
As the United States struggles to develop a national energy policy and respond to climate change, the durability of American dependence on oil, and of the policy regime that supports dependency, raises an important question. If dramatic oil spills and the unleashing of the oil weapon could not fundamentally shake up American oil politics in the 1970s, what long-term changes might be necessary before energy politics will change today? Here, the historian may only speculate. Higher oil prices may weaken the oil industry’s grasp on political power by driving down the petroleum-intensity of the American economy. Economic constituencies based in alternative energy businesses may provide a new political counterweight to the petroleum industry. Technological innovation may create more viable alternatives. The history of 1970s oil politics suggests that short-term crises in the oil market, however, unless accompanied by deeper structural changes, provide a weak foundation on which to create substantial political and economic change.