“Oil Shockwave” Sends Tremors through the Kennedy School Forum

Even a relatively minor disruption in the global supply of oil could have profound effects for the U.S. economy and national security, according to a distinguished group of former government officials, economists, and energy and security experts who took part in an innovative role-playing exercise in the John F. Kennedy Forum Monday night (April 28).

“This simulation provides us with a vivid demonstration of how vulnerable we really are,” said Eric Rosenbach, executive director for research at Harvard Kennedy School’s Belfer Center for Science and International Affairs, which organized the event in partnership with Washington, D.C.-based Securing America's Future Energy (SAFE). “An unexpected reduction in oil supply of just three to four percent could cause prices in the U.S. to spike by more than 50 percent and have profound effects on American consumers.”

The simulation explored the nature and extent of U.S. oil dependence and the policy decisions that U.S. government officials would face in the event of a global oil crisis. Before an audience of professors, students, and members of the public and the media, a group of former high-level government officials assumed roles as senior members of the presidential Cabinet and reacted in real time as a simulated geopolitical crisis unfolded.

Members of the Cabinet, chaired by former U.S. Treasury secretary Robert Rubin, were selected to represent bipartisan viewpoints. Participants included Ashton B. Carter, Ford Foundation professor of science and international affairs and former assistant secretary of defense; Joan Dempsey, former executive director of the president’s Foreign Intelligence Advisory Board; Joseph Lockhart, former White House press secretary; Meghan O’Sullivan, former deputy national security advisor; Philip Sharp, former U.S. congressman; and Lawrence H. Summers, university professor and former U.S. Treasury secretary. Belfer Center Director Graham Allison and SAFE Founder and President Robbie Diamond introduced the participants.

Information was relayed to the group through pre-produced television newscasts and notes injected during the event. The simulation began with a newsflash from Istanbul: terrorists had attacked and sunk a cargo ship in the Bosporus Straits, thus temporarily blocking the movement of oil in the region and sending the price of oil up to $160 per barrel. As the Cabinet debated options, members were informed of a sudden outbreak of violence in Saudi Arabia. The violence generated serious doubts about the reliability of oil production in the world’s most important producer, sending prices even higher.

At the conclusion of the simulation, Rubin noted that the exercise is important because it makes policymakers and industry leaders think ahead about their options if a similar situation were to occur.
Oil ShockWave was originally produced by SAFE in 2005 and has since been conducted in a number of venues. This year, the Belfer Center and SAFE have collaborated to create Oil ShockWave: College Curriculum, a box set that includes all of the multimedia components, background materials, and instructions necessary for professors to conduct Oil ShockWave simulations in their own classrooms. The package is available to instructors free of charge through the Belfer Center website: http://www.belfercenter.org/oil.