Daniel Yergin, vice-chairman of IHS Cera, has published an op-ed in the Wall Street Journal to commemorate the 40th anniversary of the Arab Oil Embargo of 1973. The piece drives home a central point: oil production and pricing can adapt relatively quickly to changing circumstances, provided that governments refrain from stepping in to influence them.

“A lasting lesson of the crisis years is the power of markets and their ability to adjust to disruptions, if government allows them to.”

Yergin wrote that the “real lesson” of the Oil Embargo and the second oil shock in 1979 “is that they provided incentives – and imperatives – to develop new resources”. At the time, exploration in Alaska and the North Sea was in its infancy, and deepwater Gulf of Mexico and Canadian oil sands production did not start to take root until the 1990’s. “Most recent is the development of ‘tight oil,’ the spinoff from shale gas, which has increased U.S. oil output by more than 50% since 2008,” he wrote.

Yergin added that a spate of supply disruptions, including the impact of Iran sanctions and unrest in Libya, are keeping several million barrels of oil off the market, but US output growth has been critical in keeping supply shortages, and attendant higher oil prices, at bay.

“Without it, the world would be looking at higher oil prices, there would be talk of a possible new oil crisis, and no doubt Americans would once again start seeing images of those gas lines and angry motorists from 1973.”