Importance Of Oil In Us Forieng Policy

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

stayed steady.

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.