RINSE / REPEAT
The 1970s Oil Embargo vs Today’s Energy Transition
During the 1970s oil embargo, about 20% of global electricity was generated from oil.
Then something interesting happened.
Countries realized how dangerous that dependence was.
France responded with the Messmer Plan, launching a massive nuclear buildout to remove oil from electricity.
And it worked.
Today almost nobody burns oil to produce electricity anymore.
But here’s the part people forget.
Petroleum interests were pushing against nuclear expansion at the time, because nuclear would destroy oil demand in electricity.
Some research notes that fossil fuel industries resisted large-scale nuclear expansion that could displace fossil fuels.
https://www.juliusandersson.com/Industrial_Policy_and_Decarbonization_JEEA_RevisedVersion.pdf
There were also cases where oil-industry figures supported anti-nuclear campaigns.
Now compare the 1970s oil embargo with today.
In the 1970s:
- Oil powered ~20% of electricity
- Nuclear was the new disruptive technology
- Petroleum interests resisted it
Oil eventually lost electricity generation.
Today the script looks very familiar.
Replace:
- Nuclear → Wind & Solar
- Oil in electricity → Natural Gas in electricity
Same dynamic.
Wind and solar are not baseload, but they are cheap enough to eat large portions of gas generation.
And here’s the interesting twist.
Today oil & gas interests are often comfortable OR even advocating for nuclear.
Why? Because it’s a decoy.
They are “in favor of Nuclear” precisely because it's not the main threat to nat gas. Nuclear is a baseload energy, and it will NEVER be expanded to cover very large capacity, because it has a very high upfront cost, much higher than renewables.
It makes ZERO sense to put nuclear in the variable portion of the demand which is exactly where nat gas sits.
So the real disruptive technology today is not nuclear.
It’s wind and solar, because they attack the same flexible portion of the grid where gas plants operate.
Now, with thorium reactors that are modular, maybe that will change. Maybe it can work in the variable portion, and maybe some of the extra power can go into hydrogen to be stored and used for hydrogen electricity peakers, but that part is far away.
Meanwhile another shift is happening in parallel.
Oil already lost the electricity market decades ago.
Now it risks losing transportation.
EVs are increasingly competitive because THE cost per mile of electricity is much cheaper than gasoline or diesel.
Once electricity becomes cheaper and cleaner, transport electrification accelerates.
Coal will probably be much slower to disappear, because once a coal plant is built the marginal cost is low.
But the broader script looks very similar.
1970s:
Oil loses electricity to nuclear
2020s:
Natural gas risks losing electricity to wind, solar and nuclear
At the same time oil risks losing transportation to EVs.
And the geopolitical parallel is interesting.
In the 1970s the “villain disruptor” was France with nuclear.
Today the “villain disruptor” might be Spain, where solar and wind are aggressively pushing natural gas out of the power mix.
So the pattern may simply be:
Energy transition scripts repeat.
1970s
Oil → replaced in electricity
2020s
Natural gas → next in electricity
Oil → threatened in transport
RINSE / REPEAT.
However while there is likely an $Oil shock, given the more numerous alternatives in both power and transportation , it’s likely to be a lot more subdued than in the 1970s.