Oil & its Geopolitics

Oil & its Geopolitics

Try to imagine a world in which fossil fuels had never been available: what might it look like?

Petroleum has a long history of use Natural oil seeps were known and stuff was used Tar Water Creek, SC Mountains Asphalt-covered game pieces Caulking wooden vessels & reed baskets for waterproofing

Oil was not created equally around the world which did not matter for most of human history

And natural petroleum takes a very long time to be made

In the 19 th century, oil became important as a source of illuminant, for lighting Camphene or "burning fluid" -- 50 cents (alcohol / turpentine / camphor oil -- bright, sweet smelling) whale oil -- $1.30 to $2.50 lard oil -- 90 cents (low quality, smelly) coal oil --50 cents (sooty, smelly, low quality) (the original "kerosene") kerosene --60 cents (introduced in early 1860s)

Although oil was collected from seeps and shallow wells, petroleum was first found in volume in Titusville, Pennsylvania, 1859, during a search for water

Pennsylvania and other oil districts were overrun with small prospectors, and the oil market rapidly suffered from excess supply. From this, there emerged a global market for kerosene, and a global search for new sources. This generated even more by-product relative to global demand!

As small companies went bankrupt, John D. Rockefeller & the Standard Oil Trust bought them up, trying to consolidate and monopolize the world oil market it was eventually broken up under U.S. antitrust law

The breakup of the Standard Oil Trust did not lead to the disappearance of Standard Oil: some 20-30 companies emerged, each with its own U.S. territory. And these were gradually bought up, as well. Standard of New Jersey (now ExxonMobil)

Standard Oil companies spread all over the world

Meanwhile, other countries and companies got into the oil game. Early in the 20 th century, the British Royal Navy converted its warships from coal to oil

As the global oil industry developed, the Seven Sisters emerged to dominate world petroleum Chevron ExxonMobil Only four of the seven remain

To provide oil for the Royal Navy, Britain set its eye on Persian oil & established the Anglo-Persian Oil Company which effectively ran Persia/Iran

Persia (Iran) came to be the major source of British oil, and a source of constant heartbreak. High demand for oil in WWI set off a race for dominance in the Middle East in order to control the petroleum resources with Britain & Russia competing for influence in Iran

WWI was the first oil war in which internal combustion played a major role

During WWI, Britain instigated an Arab Revolt against the Ottomans, making promises of independence to various tribes and groups (including the Kurds)

Britain & France agreed to carve up the Middle East: Sykes-Picot Map of 1916

This was the final disposition: Britain & France received League of Nations mandates & made promises to set up countries & kingdoms in Iraq, Kuwait, Syria, etc.

Parenthetically, Palestine was also carved up, something that continues today The Balfour Declaration, by the way, made promises of a Jewish homeland in Palestine a commitment upon which Britain quickly reneged

French British 1925 These were the League of Nations mandates in the Middle East

This is where the oil is

Saudi Arabia did not come under direct European control. By the early 1920s, it was consolidated into a single kingdom through war and bribery under a single ruler, Ibn Saud, whose sons have ruled ever since

Meanwhile, back in the United States, horseless carriages, powered by steam, coal, oil, gasoline, were coming into style.

Both railroads and roads followed older routes west.

By 1870, the transcontinental railroad was complete, although many parts of the country were not yet linked to the rail system

Auto routes thus followed both trails and rails

At the turn of the 20 th century, automobiles were toys for the wealthy and so the demand for fuel remain limited

This changed when, around 1908, Henry Ford introduced Fordism (assembly line production) and began to pay his workers enough so that they could buy Model Ts. Then the demand for gasoline began to rise rapidly.

Roads & highways were paved Gas stations began to appear

Tourism took off, and all of the industries associated industries with the automobile emerged and expanded

Meanwhile, back in the Middle East In 1928 & 1929, the Seven Sisters met to imposed oil production limits on the world market, outside of the U.S. The Achnacarry Agreement of 1928 and Red Line Agreement of 1929 represented the creation of the first oil cartel

In WW II, the Allies relied almost entirely on petroleum from the Western Hemisphere There were concerns about depletion so the U.S. entered the Middle East

Saudi Arabia was the next big oil find and the U.S. was determined to get in

In 1945, FDR met with Saudi King Abdul Aziz to cement the Arabian oil protectorate under the U.S. Saudi oil resources would be controlled by American companies, which would position them well in the world market and make the country a U.S. protectorate

An American commitment to the region might also keep the Soviets from keeping a foothold in the region but this remained fairly limited until the late 1960s

In 1950, the Iranian majlis nationalized the Anglo-Iranian Oil Company (BP), after failing to receive higher royalty payments In 1953, the CIA & MI-5 organized a coup to restore the Shah this came back to haunt Jimmy Carter in 1978-80

OPEC was created in the early 1960s, when the Soviet Union began marketing oil and the Seven Sisters tried to cut both price and royalties to oil-producing countries

In 1968, the UK announced it would withdraw its military forces east of Suez, aka, from the Persian Gulf When Richard Nixon took office in 1969, he began to implement the Nixon Doctrine in Vietnam and the Persian Gulf the latter requiring an increase in the price of oil

Ultimately, the price of oil quadrupled, leading to the economic crisis of the 1970s By the end of the decade, the Nixon Doctrine had gone bad, the Shah lost his throne and, soon thereafter, Iraq attacked Iran

In 1979, President Carter announced his eponymous Doctrine Let our position be absolutely clear: 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. President Jimmy Carter, January 23, 1980 This meant the USSR and, later, Iraq and, now, Iran

After the Shah of Iran lost his throne, Saddam Hussein saw the turmoil in Iran as an opportunity to expand Iraq s access to the Gulf. This was the First Gulf War. Washington saw the war as an opportunity to keep two unfriendly regimes occupied and tried to aid both sides The price of oil took a dive during the recession, and did not recover for close to 20 years.

In early August 1990, Iraqi forces invaded and occupied Kuwait, laying claim to the lost province and, perhaps, posing a threat to Saudi Arabia s oil

Centcom was sent to Saudi Arabia to protect its oil and to push Iraq out of Kuwait The major concern seemed to be the cost of oil, and not supply This also set things up for the Second Gulf War, aka, invasion of Iraq in 2003 How did we get there?

Wars in the ME appear to drive up oil prices, not maintain or reduce them! Why, then, the invasion of Iraq in 2003?

After the collapse of the USSR, the Pentagon began to cast about for a new strategy/policy Like NSC-68, this was initially discarded, but it became the basis for the proposals of the Project for the New American Century (PNAC)

PNAC proposed a military buildup to deter the emergence of peer competitors (i.e., China) [What we require is] a military that is strong and ready to meet both present and future challenges; a foreign policy that boldly and purposefully promotes American principles abroad; and national leadership that accepts the United States global responsibilities. PNAC s founding principles PNAC also urged the overthrow of Saddam Hussein

The Republican coalition in 2002 consisted of Cultural conservatives who wished to see the restoration of family values and more intervention into certain private matters The Christian Right, which also sought value restoration as well as the Christian Millennium, due to begin in the Middle East Advocates of the Revolution in Military Affairs, who wanted to restructure and retool the military so that it became even more dominant and less reliant on boots on the ground Neoconservatives, who wanted to disseminate democracy and capitalism, especially in the Middle East, in order to open markets, ensure access to oil, and defend Israel, and The many people who had grown tired of Bill Clinton.

War against Iraq would fulfill a number of this coalition s wishes It could provide a military foothold in the region, to ensure oil flows and deter Iran It would allow the Pentagon to demonstrate application of the RMA, and get rid of the oldstyle generals & admirals It could generate broad public support and offer social discipline It could lead to the spread of democracy & markets and offer new economic opportunities for the U.S. It could fulfill some of the prophecies of the Revelation of St. John

And it would get rid of Saddam Hussein Launching such a war would prove extremely difficult without the proper provocation by Iraq

9/11 offered a window of opportunity But a number of things went awry with the plan including the war and the economy