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
general.
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 ex...
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As the Reconstruction Era ended, the United States became the up and coming world power. The Spanish-American war was in full swing, and the First World War was well on its way. As a result of the open-door policy, England, Germany, France, Russia, and eventually Japan experienced rapid industrial growth; the United States decided to pursue a foreign policy because of both self- interest and idealism. According to the documents, Economic self- interest, rather than idealism was more significant in driving American foreign policy from 1895 to 1920 because the United States wanted to protect their foreign trade, property and their access to recourses. While the documents also show that Nationalistic thought (idealism) was also crucial in driving American foreign policy, economic Self- interest prevailed.
On January 10th 1901 the discovery of oil at Spindletop would lead to the greatest economy boom the world has ever encountered. The amount of oil that would be discovered across Texas would be more than enough to power America through the next several decades. The effects of having oil would completely change Texas culture, lifestyle, and business tremendously. In the book of Oil In Texas, will prove that America would change completely from agriculture nation to an industrial nation after the discovery of oil in Texas.
Energy Crisis (1970’s) states that the crisis officially began when the “Organization of Arab Petroleum Exporting Countries (OAPEC) reduced their petroleum production and proclaimed an embargo on oil shipments to the United States and the Netherlands, the main supporters of Israel.” They did this because of the United States providing support to Israel during the Yom Kippur War (Energy Crisis (1970’s)). Although it “ended in late October, the embargo and limitations on oil production continued, sparking an international energy crisis” (Energy Crisis (1970’s)). The United States presumed that a boycott would damage the Persian Gulf financially, however, because of the rise in the price of oil, it actually helped them (Energy Crisis (1970’s)). The price of oil actually shot from $3 a barrel to $12 a barrel. (Energy Crisis (1970’s)). This produced tremendous lines at gas stations, exorbitant gas prices, and people were told not to put up Christmas lights. Other countries that were affected could only heat one room in the winter (Energy Crisis (1970’s)). The American auto manufactures were injured as well while they were turning out large vehicles, whereas Japanese manufacturers produced tiny fuel- efficient autos (Energy Crisis (1970’s)).
In 1908, the U.S. Geological Survey (USGS) predicted that the total future supply of U.S. oil would not exceed 23 billion barrels. In 1914, the U.S. Bureau of Mines predicted that only 5.7 billion barrels of oil remained. In 1920, the USGS proclaimed the peak in U.S. oil production was almost reached. In 1939, the Department of Interior declared that there was only 13 years of oil production remaining. In 1977, President Jimmy Carter claimed, “We are now running out of oil.” Despite these predictions, the U.S. has produced over 200 billion barrels of oil since the early 1900’s. (The Futurist, 1997)
Aside from national security interests domestic thirst for oil boomed. The war brought us out of the Great Depression. During the Depression a traditionally capitalist American society embraced a kind of socialism with the New Deal. WWII transformed the bear turned in a raging bull. Capitalism was back with a vengeance, charging forward stronger than it had ever been before. The heavy industry built up to sustain the war effort was retooled to meet the demands of the emerging consumerist culture of the 1950s. The new explosion of industrial output became so pervasive that the decade ended with President Eisenhower warning of the dangers of the growing “Military-Industrial Complex.”
The United States has had several scares throughout its history in terms of oil, most turn out to be over exaggerations of a small event. However, these scares highlight a massive issue with the U.S. and that issue is the U.S.’s dependence on foreign oil. Why does it matter that our oil should come from over seas? In a healthy economy this probably wouldn’t be as relevant, but the U.S.’s economy is not exactly healthy at the moment. There are 4 things that I would like to address: what the problem is, how it affects us, what some solutions are, and what solutions I feel are best.
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Maynes, Charles. "The Middle East in the Twenty-First Century." Middle East Journal 52.1 (1998): 9-16. JSTOR. Web. 6 June 2011.
A major powerhouse that pushed the boundaries during the early 20th century—especially during the 1920s—was the United States. After coming out of World War I victorious and with relatively little losses, the United States’ post-war economy was the epitome of consumerism. As the cost of production continued to drop, items once thought of as a luxury, such as vehicles, became within the price range of everyday consumers. The trend began when Henry Ford created the assembly line and continued to pick up momentum as the century progressed.
In conclusion, OPEC's monopoly of the petroleum industry has been a strong one since the 1960's since its members enjoy economies of scale. Its decisions concerning the output of petrol have always been strong affecting the rest of the world. This monopoly is socially inefficient due to the output and the deadweight loss that results. Interestingly enough, to break this monopoly, the new Iraq has the potential to turn the market power around.
Significance: The United States must face the fact that the world is running out of oil and with today’s rising oil prices, economic and political instability in regions where the United States gets the majority of its oil, this country must begin looking into alternative means of energy to replace oil and end our dependence on foreign powers.
The Kingdom of Saudi Arabia is a petrostate. It is a petrostate in the sense that the oil sector dominates the national economy and international exports. (Colgan 226) This is due to Saudi Arabia’s one crop economy, oil. (Ali 100) Oil accounts for 70-80% of the state revenue as well as roughly 95% of export revenues. Before the discovery of oil in the 1930s, the economy rested on Islamic pilgrims. Containing the Grand Mosque, Al-Masjid al-Haram, Saudi Arabia gets a large influx of believers every year for the Hajj, one of the Five Pillars of Islam. During this time of year, income was made by food and shelter sold to the travelers. This was enough to support the state, but not enough to make it the monetary power it is today. What allowed for Saudi Arabia’s climb in the world economic ladder was oil. Oil has been a valuable industrial resource since the beginning of World War 1. Since then the demand for oil has progressively become higher and higher amongst industrial nations, allowing for oil rich states to receive large amounts of affluence. Among these oil rich states is Saudi Arabia, the region with the highest capacity for oil production out of the entire Middle East. From their remarkably high oil production, Saudi Arabia was able to gain considerable amounts of wealth and political significance. Oil in Saudi Arabia politically affected the Saudi government in both their foreign and domestic policy by providing economic power, the ability to fund wars, the ability to use economic diplomacy.
Bayon's first body paragraph illustrates America's economic vulnerability in order to prove the topic of America's dangerous overdependence on oil. We consume more than our domestic oil supply due to being so oil dependent, and as a result the author indicates Washington D.C. is practically forced to do business with hostile countries for oil. This creates economic vulnerability of the United States to oil price spikes and inflation possibilities. In 2008, "The United States imported 4 million barrels of oil daily, or 1.5 billion barrels yearly from "dangerous or unstable" countries at a cost of about $150 billion per year. (www.americanprogress.org)." These oil prices of $150 billion dollars per year can be decreased if hydrogen fuel cells were in greater use. As a result of the laws of supply and demand, the United States will have no power over the increasing prices o...
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