Beginning In fall of 1973 and extending into the early winter of 1974, oil producing nations of the Middle East and South America imposed an oil embargo on the United States and its western allies. This resulted in a serious blow to their economies in general and to gas turbine manufacturing in particular for the rest of the decade.
The oil crisis officially began on October 17, 1973. Members of Organization of Petroleum Exporting Countries (OPEC), consisting of the Arab members, Venezuela and other supporters of Egypt and Syria, decided to punish the USA for supporting Israel in the ongoing Yom Kippur War. OPEC members agreed to use their world-wide, price-setting power to raise oil prices, after attempts at negotiation with the “Seven Sisters” earlier in the month failed (see below). Due to their thirst for OPEC oil, soaring prices were dramatically inflationary to the American and European economies, stifling economic activity. To counteract this attempt at “black mail,” targeted countries responded with a wide variety of new, and mostly permanent, initiatives to contain their further dependency on foreign oil. Also, it can be said that the Northeast Blackout of November 1965 and the OPEC oil embargo of October 1973 formed “bookends” on the gas turbine power generation business. Fig. 14-2 shows a “black start” unit owned by Green Mountain Power (GMP) at Winooski, VT installed circa 1967 with two (white and primer red) oil tanks nearby.
Dubbed by an Italian entrepreneur, Enrico Mattei, the so-called Seven Sisters, were comprised of seven huge, multi-national oil companies. After the breakup by the US Government of Standard Oil monopoly earlier in the 20th century, several new companies were created. With their virtual monopoly on oil production, refinement and distribution, they were able to take advantage of the rapidly increasing demands for oil products and turn huge profits.
Being well organized and able to negotiate as a cartel, members were able to have their way with most Third World oil producers. However, Seven Sisters’ influence declined when OPEC challenged them, as the Arab states and Venezuela tried to wrest control over oil prices and production,
The so-called Seven Sisters oil companies included:
- Royal Dutch Shell
- Standard Oil of New Jersey (Esso). This later became Exxon, now ExxonMobil.
- British Anglo-Persian Oil Company (APOC). This later became British Petroleum (BP), then BP Amoco following a merger with Amoco (which in turn was formerly Standard Oil of Indiana).
- Texaco. This later merged with Chevron and was Chevron-Texaco. The company has reverted back to just Chevron.
- Standard Oil of New York (Socony). This later became Mobil.
- Standard Oil of California (Socal). This became Chevron.
- Gulf Oil. Most of this became part of Chevron, with smaller parts becoming part of BP.
Gas turbine sales in the United States plummeted in the middle to late 1970s. For instance, GE sold about 800 gas turbine/generators in the previous eight years. At its sales peak around 1970-71, GE was shipping about two package power plants per week out of their two factories in Schenectady, NY and Greenville, SC. One client, Consolidated Edison Company (ConEd), purchased 48 package power plants at their Gowanus and Narrows barge sites on the East River in Brooklyn, NY. After the oil embargo began, sales fell to a handful of units per year.
Fig. 14-2 above shows a typical MS5001L package power plant installed at the ConEd generating station in Astoria (Queens), New York in 1970. The unit had a “black start” diesel starting engine, but operated on a single fuel (natural gas) with a rating of 15 megawatts (NEMA conditions) at its sea level location near the East River in Astoria Queens, NY.
Even new-unit installations at international locations suffered in the 1970s due to the high cost of imported fuel oil required by gas turbines. Caribbean nations, like Aruba, Curacao, St. Thomas, St. Croix and Jamaica, continued to order the smaller MS5001P gas turbines in the middle of the decade due to power shortages on resort islands. Some islands had their own refineries. Larger countries like Puerto Rico and Venezuela had high enough power demands to warrant the larger MS7001B & C power plants. Turbine manufacturers like GE and Westinghouse could be thankful that there was still some international demand for gas turbine generators in the late 1970s, despite the lingering effects of the Arab Oil Embargo.
The gas turbine in Fig. 14-3 is a MS5001P-NT installed in 1980 in St. Thomas, USVI. It was upgraded with new-tech parts in the year 2000 to increase power output and to add a heat recovery steam generator (HRSG) to recover the exhaust heat for steam generation. The steam plant is located in the blue building behind it with the tall stack. A generator-end view of the upgraded plant appears in Fig. 14-4 above.
Now for a personal story:
In the spring of 1973, I was supervising a major overhaul of a unique General Electric gas turbine installed in the Shell-Amuay refinery on the Paraguana Peninsula in Venezuela. Amuay was the largest oil refinery in South America at the time. This turbine was very unique (MS5001A) because it was a “cold end” drive unit installed in 1958. The generator was driven on the compressor end of the turbine. The exhaust end was nearby the accessory gear box that drove some other auxiliaries like the lube oil pump, water pump and a fly-ball governor. Yes, a rotating pilot valve type fly-ball governor on a gas turbine! The controls were affectionately called “links and levers.” It seems that refinery owners did not want any electro-hydraulic controls like those of the fuel regulator (see Chapter 7 herein) because of their fear of fires. This design was very unique for GE gas turbines.
In June of that year, we completed the reassembly of the turbine and I returned to the USA, as this was my final field assignment for GE. My wife and I settled in western Massachusetts. After a brief leave of absence from GE to consider graduate school, I returned to work as a product test engineer at GE’s Mechanical Drive Turbine Department (MDTD). The commute from Belchertown to Fitchburg was about 50 miles each way, so I bought a Volkswagen “fast back” to get better mileage. Little did I know how fortuitous that purchase would be in October. Gasoline prices and shortages would be somewhat mitigated by my 30 mpg VW!
Remember the annoying 55-mile per hour speed limit in the 1970s? The Eisenhower interstate highway system, with trucks roaring past obedient motorists, was indeed scary!
Confession: At the height of the crisis in Massachusetts, commuters who had odd numbered license plates were allowed to purchase gasoline only on the odd-numbered days of the month. Drivers with even-numbers were, in turn, limited to even-numbered days. I confess that I often temporarily swapped license plates with my wife’s Chevrolet Camaro some days, just so I could fill up the VW with gas. On some days, filling stations only allowed one dollar’s worth of gas!
Worthy of Note: most of the imported gasoline and heating oil coming into the New England states in this decade came from the Venezuelan-owned company known as Citco. So get this, in the first part of the year in 1973, I was overseeing the overhaul of a vital power generator at the largest refinery in South America; by year’s end, I was sitting in a lines to purchase few bucks worth of Citgo gas! In short, I do not subscribe to the LIE that there was truly a world-wide oil shortage! The tankers I saw idling off Paraguana Peninsula awaiting product from Amuay convinced me of that.
The energy crisis in the 1970s was devastating to the USA. It eventually lead to the defeat of President Jimmy Carter for a second term in 1980. Ronald Reagan, reaped the benefit of high inflation and the negative politics accompanied it. What followed was a serious recession early in the next decade.
Little Known Fact: President Carter (an engineer in a previous life) challenged America to develop a national energy policy after the OPEC fiasco in the 1970s. He was shunned by the Congress due to high inflation and America’s continued dependency on fuel oil for home heating and gasoline for automobiles. He wanted to expand drilling in locations such as Alaska and the Gulf of Mexico.
Final Comment: Nearly four decades have passed since the OPEC embargo of the 1970s and America still does not have a national energy policy. Presidents have come and gone since Carter’s challenge: Reagan, Bush the Elder, Clinton, Bush the Younger and currently Obama. Presidents have only two tools to motivate the American people: patriotism and fear. We should fear the influence and control of imported energy. Also, we should follow emotion of patriotism to get a policy passed in Congress.