The Wall Street Waltz: 90 Visual Perspectives, Illustrated Lessons From Financial Cycles and Trends, Revised and Updated Edition

Chart 72

Crude Oil Supply: A Tale of Government Involvement

This is the companion piece that continues where the last chart left off. It shows the trade-offs among domestic oil production, imported oil, and total oil consumption. Between 1950 and 1975, oil consumption tripled. As the last chart showed, an ever-larger part of U.S. energy usage was being supplied by electric power, which isn't very efficient and which was built into the economic system via devices that are hard to replace, such as the 1950s craze for electric ranges.

But this chart's real story is threefold. First, foreign oil took a continually increasing share of the growing oil picture, growing from a virtually nonexistent market share in 1950 to fully half of 1976 usage. Second, while domestic production grew, it grew very little. In 25 years, domestic oil production increased by just 54 percent, which works out to a 1.8 percent average annual increase—hardly robust.

Finally, there is the amazing fact that domestic production actually decreased once OPEC boosted oil prices. Remember late 1973? OPEC boosts prices. Gas lines take over America. Industrial producers hoard oil-based raw materials. Logic would say, and lots of leading observers of the day believed, that OPEC would quickly fizzle, but it didn't. Voters and the media howled for Congress to do something. As you may recall, President Ford created a cabinet-level Department of Energy and named William Simon “Energy Czar.” Then, in classic government form, ...