Essay, Research Paper The Importance of Oil In U.S. Foreign Policy Introduction During the oil and energy crisis of the mid-1970s Americans became painfully aware of the consequences of the
Essay, Research Paper
The Importance of Oil In U.S. Foreign Policy
During the oil and energy crisis of the mid-1970s
Americans became painfully aware of the consequences of the
United States dependence on foreign sources of oil.
Unfortunately, research and exploration for alternative
sources of oil in North America has not been pursued
vigorously enough to cease such foreign dependence.
As a result, in the mid-1990s Americans find themselves
in the same precarious position as they were during the
1970s. The Persian-Gulf War in 1991 was all the proof needed
to convince the United States of how strongly oil still
influences our foreign policy and international relations in
Oil and U.S. Foreign Policy: Historical Issues
The United States has had a long history of supporting
and aiding oil-rich countries in time of political or
economic crisis. Specifically, the U.S. has relied
predominantly on oil imports from the Middle East since the
1920s. This was a result of several events.The availability
and cost of gas became a critical issue in 1920, because
there were numerous oil shortages on the Pacific Coast.
According to Beaver (1991), “Union Oil and Standard Oil of
California rushed petroleum by rail from Texas to the Los
Angeles area in order to ease “the acute shortage of
gasoline” and the long lines at service stations. In
Portland, Oregon, gasoline was rationed during the summer
months as the price climbed to 50 cents per gallon” (Beaver,
1991, p. 241).
As a result of this situation and another historical
factor, consumption of oil almost doubled during the decade.
This factor was Americans love of the newly invented
automobile. Right after World War I and throughout the
1920s, the U.S. began to experiment with ways of developing
its own energy resources, namely the use of synthetic fuels.
However, during the 1920s, synthetic fuel development was
ultimately not successful. However, the issues surrounding
oil did become more clearly defined. According to Beaver
(1991), “the availability and cost of conventional energy
sources; national security concerns; the technical, legal,
and economic uncertainties related to synthetic fuels; and
the emergence of large oil companies as major forces in
shaping energy policy. These issues that became salient in
the 1920s remain relevant to the 1990s” (Beaver, 1991, p.
Both the Wilson and Harding administrations took
proactive foreign policy actions in order to ensure adequate
supplies of oil for the booming economy. Both
administrations assisted major U.S. companies in their
attempts to secure foreign oil agreements. For example, the
government tried to persuade Great Britain and the
Netherlands to allow U.S. oil companies into the Middle East
and Pacific regions where they controlled most of the oil
reserves. The U.S. government hoped to gain an open door
policy in oil exploration. However, U.S. diplomacy failed to
secure this from either the British or the Dutch. According
to Beaver, “Such failures frustrated U.S. officials. Frank
G. Lane, secretary of the interior, called British control
of Middle Eastern oil “a menace.” In fact, anti-British
sentiments prompted Congress to pass retaliatory legislation
barring foreigners from acquiring oil leases on public
lands” (Beaver, 1991, p. 241).
The postwar initiatives to secure foreign oil set a
precedent that was to become more important in later
decades. Namely, when oil was in short supply, major
companies, with the support of the U.S. government looked
to Latin America and the Middle East rather than
concentrating on domestic solutions. As a result, “These
initiatives reduced any sense of urgency to explore
synthetic fuels; as long as foreign oil could be obtained at
reasonable prices, the difficult task of developing
synthetics could be averted” (Beaver, 1991, p. 241).
Thus, the U.S. found itself dependent upon oil from the
Middle East. The Middle East, except for the constant
struggle between Israel and her Arab neighbors, had long
been calm. Soviet pressure on Greece, Turkey, and Iran had
been successfully contained in 1947 by a combination of
local opposition and firm American support.
In 1971, the British announced that they would withdraw
their remaining forces from the Persian Gulf. The French and
British withdrawal from such colonial dependencies as Syria,
Lebanon, Palestine, Egypt, Jordan, Lybia, Cyprus and Aden
had pacified local nationalists and helped to calm tension
within the region. Soviet attempts to cross over the barrier
of the “northern tier” and to win countries such as Egypt,
Iraq, and Syria with massive military and economic aid had
been only partly successful.
In addition, relations between Washington and the major
oil companies with the leading oil producers, Saudi Arabia
and Iran were friendly. The most serious problem for the
companies was persistent competition from the Soviet oil
exports and from smaller Western companies rapid expanding
their fields in Libya. The result had been a recurrent glut
of oil and a slow-motion price war that both tripled the
volume of oil traded in world markets in a decade and cut
the price of the standard grade of Saudi crude petroleum
from $2.08 a barrel in 1958, to as little as $1.30 in 1970.
However, in the mid-1970s that all began to change due
to the growing political unrest in the Middle East. The
first crisis was the Arab-Israeli war of 1973. It was during
that year that oil prices jumped from $2 to $10 and during
the Iranian revolution of 1979, prices went from $13 to $32.
From that point on, the United States found that it had a
vested interest in engaging in serious foreign policy
relations with the Middle East countries to ensure the
continuing availability and cost containment of its oil to
the United States.
Oil And Its Impact On Foreign Policy
Why is oil considered part of U.S. foreign policy?
According to Rustow (1982), “Oil is the most important
commodity in the world economy. Its price is set in the
Middle East, which both contains most of the world’s
reserves and is its most troubled political region” (Rustow,
1982, p. 19). Although the United States appears the most
vulnerable to the economic dangers of a gas crisis, and the
political dangers from the Middle East, it also have the
greatest potential to impact the economy of oil and the
politics of the Middle East than any other single nation.
According to Rustow, “More than half the arms currently
stockpiled in the Middle East were made in the United
States. And if somehow were Americans could wean ourselves
from oil imports, we could deprive OPEC of its best customer
overnight” (Rustow, 1982, p. 20).
Although the United States had always come to the aid
of the oil-producing countries it depended on, it was during
the late 1970s and early 1980s that the government of the
United States began to vehemently fix its foreign policy on
solving the oil crises it found itself facing.
For example, according to Rustow, “In 1968 Henry
Kissinger had proved oblivious to the problems of the
Persian Gulf; by 1980 Jimmy Carter was to declare the Gulf a
region of ‘vital interest’ to the United States” (Rustow,
1982, p. 19).
This vital interest was most clearly delineated during
the 1991 Gulf War and the crisis that led to it. Saddam
Hussein’s attack against oil-rich Kuwait proved just how
vital the region was to not only the United States, but to
the entire world. Oil is one of the main reasons we are in
the Persian Gulf indefinitely. According to Hoagland,
“Saddam’s threat to Saudi oil fields triggered the
significant escalation of stationed American troops in the
Gulf that has apparently enraged Saddam, Saudi domestic
extremists or whoever set off that truck bomb” (Hoagland,
1996, p 5B).
As recently as this year, President Clinton had to deal
with the threat of Saddam Hussein. And, although he has
retreated for the time being, he has not gone away. He still
holds a “carrot” over the U.S. and it is oil. This time, the
U.S. held off that fight, and protected Saudi oil fields by
extending the no-fly zone to southern Iraq. Oil prices
Just as during the energy crisis of the 1970s, during
the Gulf war there was a great deal of discussion about the
danger of America’s dependence on foreign oil. Once again,
as soon as the perceived threat seemed to vanish, in this
case, Saddam Hussein, the fear once again went away.
According to Heilbrunner (1996), “But the fundamental
problem has not. For an administration obsessed with
geoeconomics, it is startling that the Clintonites have
devoted almost no attention to the rise in American oil
imports. Instead, they have rolled over as the Republican
Congress has slashed funding for energy research”
(Heilbrunner, 1996, p. 4) .
America’s dependence on Mideast oil is frightening.
According to Heilbrunner,” U.S. demand in the coming years
is expected to exceed demand as in the 1970s, when the U.S.
suffered twin oil shocks. At the same time, U.S. production
is shrinking yearly: onshore production of crude oil will
decrease at an annual rate of 1.7 percent through 2015,
according to the Energy Information Administration, the
independent statistical agency within the Department of
Energy” (Heilbrunner, 1996, p. 4).
Many people who live and die by the free market, don’t
see this as a problem. They say that the market will adjust
itself to any swings in demand. Their assumption is that
people will cut back when prices go up. This in turn, will
drive prices back down again.
Although prices went as high as $40 a barrel after
Saddam overran Kuwait, “they soon stabilized as the Saudis
stepped up production. But this was just good luck. Had
Saddam immediately moved into Saudi Arabia instead of
waiting in Kuwait, his 100,000-strong army could have seized
Saudi oil fields located less than 200 miles from the
Kuwaiti border and protected only by a Saudi national guard
battalion of less than 1,000 men, as Robert J. Lieber
pointed out in the summer 1992 issue of International
Security. Saddam would have controlled 46 percent of the
world’s oil reserves” (Heilbrunner, 1996, p. 4).
As both the threat of Saddam Hussein and the recent
bombing at an Air Force Base in Saudi Arabia demonstrate,
the potential for oil-threatening conflict in the region
will not go away. Iraq has already attacked three of its
neighbors–Iran, Kuwait and Israel. According to
Heilbrunner, “There is no reason to believe Saddam won’t
strike again. Instability could come from other sources. One
scenario might be a joint Turkish-Iranian grab for Iraqi
territory in the north. The ascendance of Necmettin
Erbakan’s religious Welfare Party in Turkey does not bode
well for America’s future ability to influence Turkey. Saudi
Arabia may become another source of trouble, since Crown
Prince Abdullah has made no secret of his unease with the
U.S. As America’s oil thirst continues to rise, an
Abdullah-led Saudi regime could work more strenuously to
resurrect opec and influence American policy toward Israel”
(Heilbrunner, 1996, p. 4) .
According to most experts, there is yet another
challenge facing the U.S. The nation must devise a clear
strategy combining oil and national security. Part of that
strategy must including reducing American dependence on
foreign oil. Key strategies to achieve this goal include
promoting conservation and perhaps subsidizing public
transportation, such as a high-speed rail network. As
Heilbrunner says, “But safeguarding American oil also means
presiding over a pax Americana rather than a lax Americana
in the Middle East. The only thing Saudi Arabia, Jordan and
Egypt fear more than U.S. resolution is U.S. irresolution.
In the short term, Clinton and Gore might work to bring 4
million barrels of oil per day back onto the market. They’re
located in Iraq, awaiting a regime sufficiently civilized to
be allowed to sell them” (Heilbrunner, 1996, p. 4).
Conclusion: Current Issues
Just how relevant is the issue of oil to America today?
According to Hoagland, “In 1973, America consumed 17.3
million barrels of oil a day, importing 6.2 million barrels
or 35 percent. One out of every 10 imported barrels came
from Saudi Arabia. By 1980, consumption and import patterns
had not changed. Last year Americans used 17.7 million
barrels a day. Imports rose to 8.8 million barrels–50
percent of consumption. Saudi Arabia accounted for 15
percent of U.S. imports, and 86 percent of all U.S. imports
came from the Persian Gulf” (Hoagland, 1996, p. 5B).
In addition, the problems that the U.S. faces in
maintaining a presence in the Middle East are far from over.
According to Hoagland, “The death of the 19 airmen at
Dhahran testifies to the real cost that Americans pay for
continuing to rely so heavily on energy supplies that can be
disrupted at the drop of a crown, or the rise of a madman”
(Hoagland, 1996, p. 5B).
Ashton, Michael (1992, Apr. 1). “The Efficient Tariff:
Systematically Balancing Security And Welfare
Concerns.” American Economist, Vol. 36, 44.
Beaver, William (1991, Jan. 1). “The U.S. Failure To Develop
Synthetic Fuels In The 1920s.” Historian, Vol. 53, 241.
Dorr, Robert. (1996, Jul 15). “Don’t Blame Perry For The
Saudi Attack.” Air Force Times, Vol. 56, 62.
Heilbrunner, Jacob (1996, Oct. 7). “Over A Barrel.” New
Republic, Vol. 215, 4.
Hoagland, Jim. (1996, Jul. 15). “U.S. Dependence On Oil
Killed Those 19 Airmen.” Indianapolis Business Journal,
Vol. 17, 5B.
Hsiung, James (1991, Apr. 1). “The Post-Cold-War World Order
And The Gulf Crisis.” Asian Affairs: An American Review,
Vol. 18, 31.
Kissinger, Henry (1996, Jun. 1). “United States Foreign
Policy.” Vital Speeches, Vol. 62, 486.
Kubursi, Atif-Mansur, Salim (1993, Sept. 1). “Oil And The
Gulf War: An American Century’ Or A `New World Order’.”
Arab Studies Quarterly, Vol. 15, 1.
Nowotny, K.-Peach, J. (1992, Mar. 1). “Changes In Energy
Consumption, 1970-1989, And Energy Policy In the United
States.” Journal of Economic Issues, Vol. 26, 183.
Rogers, Paul (1996, Feb. 28). “Persian Gulf War (1990-1991)”
Colliers Encyclopedia, Vol. 18, CD-ROM.
Rustow, Dankwart (1982). Oil And Turmoil. America Faces OPEC
And the Middle East. New York, New York: W.W. Norton.
Shane Mage (1996, Feb. 28). “Organization Of Petroleum
Exporting Countries (OPEC)” Colliers Encyclopedia,
Vol. 18, CD-ROM.
Stevens, Paul (1995, Jan. 1). “Understanding The Oil
Industry: Economics As A Help Or A Hindrance.” Energy
Journal, Vol. 16, 125.
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