The Foreign Energy Policy of the United States

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Sheila Hensley
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1 The Foreign Energy Policy of the United States The foreign energy policy of the United States is governed by three inescapable constraints: first, a heavy reliance on petroleum as the nation s leading source of energy; second, a growing reliance on imported oil to supply the needed petroleum; and third, a shift in the center of gravity of world oil production from the global North to the global South, especially the Middle East, Africa, and Latin America. Together, these three constraints each building on the other have made the pursuit of foreign energy supplies a major concern of American foreign policy and led inexorably to greater reliance on the use of military force to ensure uninterrupted access to these supplies. Petroleum has come to play such a dominant role in America s energy mix because of its great versatility as an energy source and its ease of transportation. Oil can be used to generate electricity, to heat buildings, and to serve as a feedstock for an immense variety of chemical derivatives, including lubricants, pesticides, paints, plastics, cosmetics, pharmaceuticals, artificial fibers, among others. But it is in its role as a transportation fuel that oil has become most important: Petroleum products now supply approximately 97 percent of all transportation energy in the United States, propelling the overwhelming majority of all moving vehicles. Of the 20.6 million barrels of oil consumed daily in the United States in 2006, some 14.6 million barrels, or 71 percent, were devoted to transportation use. Without a steady supply of these petroleum products, the American economy would simply grind to a halt. Oil is also essential to American military power. Although U.S. military leaders like to brag about the lethality of U.S. precision-guided munitions and the growing sophistication of space-based systems, the fact is that U.S. military still relies on oil-powered vehicles to transport troops and equipment to the battlefield, keep them supplied with ammunition and spare parts, deliver munitions on the enemy. And because the United States is the only nation with a global military presence maintaining bases or missions on six continents and fleets on most of the world s oceans its military establishment has a gargantuan requirement for energy, making it the world s largest single consumer of petroleum. America s overall reliance on petroleum as a source of energy began after World War II, when the country s love affair with the automobile as it is often described began in earnest. With factories converting from war production to civilian output and millions of workers now able to afford the down payment on a Ford or Chevrolet, car ownership became de rigueur for the ordinary American household. This expansion in automobile ownership was accompanied by the construction of the nation s Interstate Highway System and a mass exodus to the suburbs, further increasing America s demand for petroleum products. According to the DoE, total U.S. oil consumption jumped from 6.5 million barrels per day in 1950 to 9.8 million in 1960, 14.7 million in 1970, and 17.1 million in At first, this vast surge in petroleum consumption was facilitated by a parallel increase in domestic U.S. oil output. When Americans began buying cars in vast numbers and moving to the suburbs, the United States was the world s leading oil producer and its homegrown energy firms were able to supply most of the nation s requirements. Production from wells in the Lower 48 States rose from 5.4 million barrels per day in 1950 to 9.4 million barrels in 1970, providing the bulk of domestic supplies and helping to keep energy prices low. But unbeknownst to most Americans, a dramatic change in the basic energy equation occurred in 1970, when production in the Lower 48 stopped growing. Although discoveries in Alaska have added some additional crude oil to domestic U.S. petroleum supplies since then, the nation s net output has otherwise declined every year since 1971 and now stands at only 4.4 million barrels per day, a mere 47 percent of what it was in the peak year of 1970.

2 But while domestic output has declined, that love affair with the automobile has shown no signs of fatigue, and so U.S. demand for petroleum has continued to grow year after year. And with domestic supplies in ever diminishing supply, the United States had no choice but to rely increasingly on imports. The nation s reliance on foreign oil as a share of total supply jumped from 21.5 percent in 1970 to 37.3 percent in 1980 and 42.1 percent in 1990, finally crossing the symbolically important threshold of 50 percent in Since then, U.S. dependence on imports has continued to rise, reaching 60 percent in 2006, the last year for which the DoE has provided such a figure. The steady increase in U.S. reliance on imported petroleum has obvious implications for American foreign policy, given the critical importance of petroleum products to the national economy. Any significant contraction in the flow of foreign oil to the United States would have immediate and devastating consequences for the health of the economy a critical vulnerability that was brought home with traumatic impact by the oil shocks of (caused by the Arab oil embargo of the United States and the Netherlands) and 1979 (precipitated by the Islamic Revolution in Iran). For this reason, American leaders have generally preferred to secure the bulk of America s petroleum imports from neighboring countries in the Western Hemisphere notably Canada, Colombia, Mexico, and Venezuela and from friendly nations elsewhere, especially the North Sea countries and those Middle Eastern supplies (like Saudi Arabia and Kuwait) that are under American military protection. But many of the countries from which the United States has long obtained much of its oil supplies are at or near their own peak in production, and so will not be able to keep increasing their exports of oil to the United States in the future. This means that this country will be forced to rely increasingly on less friendly suppliers, or to countries far removed from its traditional security umbrella, such as the nations of Central Asia and the Caspian Sea basin. Herein lies a great foreign policy and military challenge for the United States. To appreciate the magnitude of this challenge, it is necessary to consider the shift taking place in the locus of world oil production. Originally, the center of gravity of world oil production was located in the global North the United States, Canada, Europe, the Tsarist/Soviet empire, and their immediate neighbors, including Mexico. This is hardly surprising, since resource producers always gravitate toward those reserves that are close at hand and easy to extract. Even in the 1950s, two-thirds of world production was concentrated in the global North. But precisely because these reserves were developed earliest in the grand history of global petroleum extraction, they are also among the first to approach full depletion. As this occurs, energy consumers are coming to rely increasingly on reserves in the global South: notably in the Middle East, Africa, and the Caspian Sea basin. Because these deposits were developed later in the historical cycle of extraction, they have not yet reached peak output and so are capable of providing increased supplies in the years ahead. At present, the global South accounts for approximately two-thirds of global oil output a complete reversal of the situation in 1950 and will account for threequarters by 2030, if not sooner. Within the global South, moreover, only a handful of states will be capable of substantially boosting their petroleum output in the years ahead, thereby satisfying the ever-growing thirst of the United States and other thirsty consumers, like China and India. For the most part, this exclusive group is limited to Algeria, Angola, Azerbaijan, Iran, Iraq, Kazakhstan, Kuwait, Libya, Nigeria, Sudan, the United Arab Emirates, and Venezuela, plus one or two others. This shift in the locus of world oil production poses an excruciating dilemma for the United States, in that many of the countries on which the United States will be forced to rely in this new era are corrupt, unfriendly, unsafe, or divided along ethnic and religious lines. Most of them are predominantly Muslim or, like Nigeria and Sudan, have large Muslim populations. Even those that

3 are not at war themselves, like Saudi Arabia and Kuwait, are located in dangerous war zones that encompass a constant threat to the safe delivery of oil to the United States. Corruption and political discord are endemic in most of these states, and terrorist or insurgent groups operate in many of them often targeting pipelines and other oil infrastructure in their struggles against the central government or Western companies. Conflict and disorder, then, are a constant background characteristic of oil production and export in virtually all of these areas. The U.S. Response In response to this dilemma, American policymakers have adopted a three-pronged strategy: first, they have established a special relationship with Saudi Arabia and other friendly Persian Gulf petro-states, entailing U.S. military protection in return for assured access to crude petroleum; second, they have stressed the diversification of U.S. energy imports, so as to minimize America s exposure to risk of disruption in supply from any one producing area; and third, they have extended the same sort of military aid and protection to these other suppliers as has long been provided to key Persian Gulf producers. The special relationship with Saudi Arabia and the policy of extending a military umbrella over key U.S. suppliers in the Persian Gulf area can be traced back to the final years of World War II, when U.S. leaders first became concerned about the prospect of an eventual peak in domestic production and so perceived a need to acquire a secure foreign source of supply. With this in mind, President Franklin D. Roosevelt arranged a meeting with King Abdul Aziz ibn Saud, the founder of the modern Saudi dynasty, aboard an American warship, the U.S.S. Quincy, while it was anchored at the entrance to the Nile Canal on February 14, No official record was kept of this famous encounter, but most scholars and policymakers have concluded that two leaders agreed to establish an informal alliance under which the United States would assume permanent responsibility for protecting the House of Saud against its foreign and domestic enemies in return for exclusive U.S. access to Saudi oil. Certainly, senior American officials have repeatedly referred to this meeting as the basis for U.S. military ties with the kingdom. As noted by then Secretary of Defense Dick Cheney in testimony before the Senate Armed Services Committee in September 1990, following the Iraqi invasion of Kuwait, these ties hark back with respect to Saudi Arabia to 1945, when President Franklin Delano Roosevelt met with King Abdul Aziz on the U.S.S. Quincy, toward the end of World War II, and affirmed at that time that the United States has a lasting and a continuing interest in the security of the kingdom. In line with this arrangement, the United States undertook a variety of measures aimed at providing a defensive shield around Saudi Arabia and its oil fields. These included the establishment of a military base at Dhahran (beginning in 1946), the supply of U.S. arms to Saudi forces, and the deployment of hundreds (later thousands) of American military instructors and advisers in the kingdom. However, U.S. officials initially preferred to rely on Great Britain for decades the dominant power in the region to assume primary responsibility for regional security. But when London announced that it could no longer perform this role and would remove its forces from the area by the end of 1971, Washington chose to confer responsibility for regional stability on the shah of Iran, then America s principal ally in the Gulf. This approach known at the time as the surrogate doctrine prevailed until January 1979, when the shah was overthrown and replaced by radical Islamic clerics loyal to the Ayatollah Ruholla Khomeini. The rise of Khomeini, followed ten months later by the Soviet invasion of Afghanistan (placing Soviet troops only 300 miles from the strategic Strait of Hormuz at the mouth of the Persian Gulf), produced panic in Washington and led to a thorough review of U.S. policy. No longer willing to rely on surrogates like the now-deposed Shah of Iran, President Jimmy Carter and his top aides adopted what has since been called the Carter Doctrine, entailing direct U.S. military responsibility for protection of Middle Eastern oil supplies. Let our position be absolutely clear,

4 Carter told a Joint Session of Congress on January 23, 1980: An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force. To lend credibility to his proclamation, Carter announced a number of military moves aimed at beefing up America s capacity to employ force in the Persian Gulf and surrounding areas. The most important of these was the activation of the Rapid Deployment Joint Task Force (RDJTF), a new multi-service combat group with responsibility for all U.S. military operations in the greater Gulf region, along with the acquisition of new bases in the Gulf and Indian Ocean areas. [...] The Carter Doctrine was next invoked by President George H. W. Bush in August 1990, when Iraqi forces invaded Kuwait and posed what appeared to be a threat to Saudi Arabia and its oil exports to the United States. Our country now imports nearly half the oil it consumes and could face a major threat to its economic independence, and so the sovereign independence of Saudi Arabia is of vital interest to the United States, he told a nationwide television audience on August 8, when announcing the deployment of U.S. troops to the Kingdom. Only later, when American troops were girding for combat with the Iraqis, did administration officials offer other justifications for war the need to liberate Kuwait, to destroy Iraqi weapons of mass destruction (WMD), to bolster international sanctions against aggression, and so on. The record makes it clear, however, that the President and his senior associates initially viewed the invasion of Kuwait through the lens of the Carter Doctrine: as a threat to Saudi Arabia and the free flow of oil from the Gulf. The defense of Saudi Arabia against possible Iraqi attack (Operation Desert Shield) eventually gave way to the military campaign to drive the Iraqis out of Kuwait (Operation Desert Storm). Once this had been accomplished, however, Bush senior balked at invading Iraq itself, fearing a prolonged war and the disintegration of the international coalition he had so carefully assembled. Instead, Bush initiated and President Bill Clinton later perpetuated the containment of Saddam, entailing a naval quarantine, the no fly zones over northern and southern Iraq, and a punishing system of economic sanctions. As noted by Bush senior and Clinton at the time, containment was intended to trigger regime change in Iraq by making conditions so onerous that Iraqi elites would overthrow the government of Saddam Hussein. By 2001, however, it had become evident that the strategy was having the opposite effect: instead of turning the Iraqi public against the regime, the sanctions were enhancing Hussein s stature as a vigorous opponent of American imperialism. And despite the terrible drubbing they received during the 1991 Gulf War, Iraqi forces were still seen as a threat to U.S. strategic interests in the Gulf. It was to protect these interests against any future Iraqi assault that President George W. Bush elected to commence the invasion of Iraq, viewing such action as the only plausible option for removing Hussein once and for all. Whatever the reasons given at the time, the 2003 invasion of Iraq can thus best be understood as a continuation of the January-February 1991 assault on Iraqi forces in Kuwait an assault that was prompted, in the first instance, by the perceived threat to America s vital interests in the Persian Gulf, as originally articulated by President Carter on January 23, At present, the Pentagon s top priority in the Persian Gulf area is to defeat the anti-american insurgency in Iraq and to establish some degree of order in Baghdad. But, consistent with its historic mission, the U.S. Central Command is also protecting pipelines, refineries, and oil-export facilities throughout Iraq. Although this effort has received far less media attention than the urban warfare in Baghdad and other key cities, it is no less important: with petroleum constituting the nation s only significant source of export income, ensuring uninterrupted oil exports is essential for the economic survival of Iraq s U.S.-backed central government. Indeed, protection of key oilexport facilities is considered a primary motivation for the U.S. military s indefinite occupation of

5 selected bases in Iraq and the establishment of a new naval command-and-control facility at a Basra oil-loading platform. [...] And so we have entered an era in which the global competition for energy is becoming increasingly fierce, in which the largest untapped supplies of oil are located in areas of chronic instability, and in which the major consuming powers are increasingly coming to rely on military measures to ensure access to key sources of supply. Not only is this leading to direct military involvement by the major powers in the internal affairs of key oil-producing states, as shown by American involvement in Iraq, but also to military competition amongst the great powers themselves for geopolitical advantage in the principal oil-producing areas. Where all this will lead is hard to predict, but if history is any judge, the outcome will not be pleasant. Source: 4 March 2008, by Michael T. Klare, website: Mapping the World, Michael T. Klare is the Five College Professor of Peace and World Security Studies (a joint appointment at Amherst, Hampshire, Mount Holyoke, and Smith Colleges and the University of Massachusetts at Amherst) and Director of the Five College Program in Peace and World Security Studies (PAWSS), positions he has held since Professor Klare has written widely on U.S. defense policy, energy geopolitics, and global resource issues. (see next page for graphs)

Investigating the Geology and Geography of Oil

S t u d e n t H a n d o u t a Investigating the Geology and Geography of Oil Land Area of Oil Countries of Southwest Asia Examine the map at right. It shows the locations of 10 oil countries in Southwest