The World's Oil
By Michael Klare
28 April, 2004
Foreign Policy in Focus
first assuming office in early 2001, President George W Bush's top foreign
policy priority was not to prevent terrorism or to curb the spread of
weapons of mass destruction - or any of the other goals he espoused
later that year following the September 11, 2001 attacks on the World
Trade Center and the Pentagon. Rather, it was to increase the flow of
petroleum from suppliers abroad to US markets. In the months before
he became president, the United States had experienced severe oil and
natural gas shortages in many parts of the country, along with periodic
electrical power blackouts in California. In addition, oil imports rose
to more than 50 percent of total consumption for the first time in history,
provoking great anxiety about the security of the country's long-term
energy supply. Bush asserted that addressing the nation's "energy
crisis" was his most important task as president.
He and his advisers
considered the oil supply essential to the health and profitability
of leading US industries. They reasoned that any energy shortages could
have severe and pervasive economic repercussions on businesses in automobiles,
airlines, construction, petrochemicals, trucking and agriculture. They
deemed petroleum especially critical to the economy because it is the
source of two-fifths' of the total US energy supply - more than any
other source - and because it provides most of the nation's transportation
fuel. They also were cognizant of petroleum's crucial national security
role as the power for the vast array of tanks, planes, helicopters and
ships that constitute the backbone of the US war machine.
a major energy supply crisis over the next two decades," Secretary
of Energy Spencer Abraham told a National Energy Summit on March 19,
2001. "The failure to meet this challenge will threaten our nation's
economic prosperity, compromise our national security, and literally
alter the way we lead our lives."
The energy turmoil
of 2000-2001 prompted Bush to establish the National Energy Policy Development
Group (NEPDG), a task force of senior government representatives charged
with developing a long-range plan to meet US energy requirements. To
head this group, Bush picked his closest political adviser, Vice President
Dick Cheney. A Republican stalwart and a former secretary of defense,
Cheney had served as chairman and chief executive officer of Halliburton
Co, an oilfield services firm, before joining the Bush campaign in 2000.
As such, Cheney availed himself of top executives of energy firms, such
as Enron Corp, for advice on major issues.
As the NEPDG began
its review of US energy policy, its members saw the US was faced with
a grave choice between two widely diverging paths. It could continue
down the road it had long been traveling, consuming increasing amounts
of petroleum and - given the irreversible decline in domestic oil production
- becoming ever more dependent on imported supplies. Or it could choose
an alternate route of reliance on renewable sources of energy and gradually
reducing petroleum use.
Clearly, the outcome
of this decision would have profound consequences for society, the economy
and the nation's security. Following the same path would bind the US
ever more tightly to Persian Gulf suppliers and to other oil-producing
countries, with a corresponding impact on US security policy. Pursuing
an alternative strategy would require a huge investment in new energy-generation
and transportation technologies, resulting in the rise or fall of entire
industries. Either way, the public would experience the impact of this
choice in every-day life and in the dynamics of the economy as a whole.
No one, in the US or elsewhere, would be left entirely untouched.
The National Energy
Policy Development Group wrestled with this dilemma and completed its
report during the early months of 2001. After a careful review, Bush
anointed the report as the National Energy Policy (NEP) and released
it on May 17. At first glance, the NEP, or the Cheney report as it is
often called, appeared to reject the path of increased reliance on imported
oil in favor of renewable energy. The NEP "reduces demand by promoting
innovation and technology to make us the world leader in efficiency
and conservation", the president declared as he released it. However,
for all its rhetoric about conservation, the NEP does not propose a
reduction in oil consumption. Instead, it proposes to slow the growth
in US dependence on imported petroleum by boosting production at home
through the exploitation of untapped reserves in protected wilderness
The single most
important step proposed in the NRP was increasing domestic oil production
by drilling in the Arctic National Wildlife Refuge (ANWR), an immense,
untouched wilderness area in northeastern Alaska. While this proposal
has generated enormous controversy in the US because of its deleterious
impact on the environment, it also has allowed the White House to argue
that the administration is committed to a policy of energy independence.
However, careful examination of the Cheney report leads to an entirely
different conclusion. Aside from the ANWR proposal, nothing in the NEP
would contribute to a significant decline in US dependence on imported
petroleum. In fact, the very opposite is true: The basic goal of the
Cheney plan is to find additional external sources of oil for the US.
In the end, Bush
made a clear decision regarding future US energy behavior. Knowing that
nothing can reverse the long-term decline in domestic oil production,
and unwilling to curb the country's ever-growing thirst for petroleum
products, he elected to continue down the existing path of ever-increasing
dependence on foreign oil.
initiative: Fact or fiction?
The fact that the
Bush energy plan envisions increased rather than diminished reliance
on imported petroleum is not immediately apparent from the president's
public comments on the NEP, or from the first seven chapters of the
Cheney report itself. It is only in the eighth and final chapter, "Strengthening
Global Alliances", that the true intent of the administration's
policy becomes fully apparent. Here, the tone of the report changes
markedly from a professed concern with conservation and energy efficiency
to an explicit emphasis on securing more oil from foreign sources. The
chapter begins, "US national energy security depends on sufficient
energy supplies to support US and global economic growth." The
report further states, "We can strengthen our own energy security
and the shared prosperity of the global economy," by working with
other countries to increase the global production of energy. It is a
mandate to "make energy security a priority of our trade and foreign
The Cheney report
is very guarded about the amount of foreign oil that will be required.
The only clue provided by the report is a chart of net US oil consumption
and production over time. According to this illustration, domestic oil
field production will decline from about 8.5 million barrels per day
(mbd) in 2002 to 7 mbd in 2020, while consumption will jump from 19.5
mbd to 25.5 mbd. That suggests imports or other sources of petroleum,
such as natural gas liquids, will have to rise from 11 mbd to 18.5 mbd.
Most of the recommendations in Chapter 8 of the NEP are aimed at procuring
this 7.5 mbd increment, equivalent to the total oil consumed by China
One-third of all
the recommendations in the report are for ways to obtain access to petroleum
sources abroad. Many of the 35 proposals are region or country-specific,
with emphasis on removing political, economic, legal and logistical
obstacles. For example, the NEP calls on the secretaries of energy,
commerce and state "to deepen their commercial dialogue with Kazakhstan,
Azerbaijan and other Caspian states to provide a strong, transparent
and stable business climate for energy and related infrastructure projects".
The Cheney report
will have a profound impact on future US foreign and military policy.
Officials will have to negotiate for these overseas supplies and arrange
for investments that will increase production and exports. They must
also take steps to ensure that wars, revolutions or civil disorder do
not impede foreign deliveries to the US. These imperatives will be especially
significant for policy toward the Persian Gulf area, the Caspian Sea
basin, Africa and Latin America.
Applying the Cheney
energy plan will have major implications for US security and military
policy. Countries expected to supply petroleum in the years ahead are
torn by internal conflicts, harbor strong anti-American sentiments,
or both. Efforts to procure additional oil from foreign sources are
almost certain to lead to violent disorder and resistance in many key
producing areas. While US officials might prefer to avoid the use of
force in such situations, they may conclude that the only way to guarantee
the continued flow of energy is to guard the oil fields and pipelines
To add to Washington's
dilemma, troop deployments in the oil-producing areas are likely to
cause resentment from inhabitants who fear the revival of colonialism
or who object to particular US political positions, such as US support
for Israel. Efforts to safeguard the flow of oil could be counter-productive,
intensifying rather than diminishing local disorder and violence.
The United States
currently obtains only about 18 percent of its imported petroleum from
the Persian Gulf area. But Washington perceives a strategic interest
in the stability of energy production there because its major allies,
including Japan and Western Europe, rely on imports from the region.
Also, the gulf's high export volume has helped to keep world oil prices
relatively low, benefiting the US economy. With domestic production
in decline, the NEP observes, the Persian Gulf "will remain vital
to US interests".
The US has played
a significant role in Persian Gulf affairs for a very long time. During
World War II, president Franklin D Roosevelt forged an agreement with
Abdul-Aziz ibn Saud, the founder of the modern Saudi dynasty, to protect
the royal family against its internal and external enemies in return
for privileged access to Saudi oil. In subsequent years, the US also
agreed to provide security assistance to the shah of Iran and to the
leaders of Kuwait, Bahrain and the United Arab Emirates. These agreements
have led to the delivery of vast quantities of US arms and, in some
cases, the deployment of combat forces to these countries. (The US security
link with Iran was severed in January 1980, soon after the shah was
overthrown by militant Islamic forces.)
US policy with regard
to the protection of Persian Gulf energy supplies is unambiguous: When
a threat arises, the US will use whatever means are necessary to ensure
the continued flow of oil. This principle, known as the Carter Doctrine,
was first articulated by president Jimmy Carter in January 1980, following
the Soviet invasion of Afghanistan and the fall of the shah of Iran.
It has remained part of US policy ever since. In accordance with the
principle, the US used force in 1987 and 1988 to protect Kuwaiti oil
tankers from Iranian missile and gunboat attacks, and then in 1990 and
1991 to drive Iraqi forces out of Kuwait.
In explaining the
need to use force on these occasions, US officials have stressed the
importance of Persian Gulf oil to domestic economic stability and prosperity.
"Our strategic interests in the Persian Gulf region, I think, are
well known, but bear repeating," then-secretary of defense Cheney
told the Senate Armed Services Committee on September 11, 1990, five
weeks after the Iraqi invasion of Kuwait. In addition to other security
ties to Saudi Arabia and its neighbors, he said, "We obviously
also have a significant interest because of the energy that is at stake
in the gulf." Iraq possessed 10 percent of the world's oil reserves
and acquired another 10 percent by seizing Kuwait, he explained. The
occupation of Kuwait also placed Iraqi forces within a few hundred miles
of another 25 percent located in eastern Saudi Arabia. "Once [former
Iraqi president Saddam Hussein] acquired Kuwait and deployed an army
as large as the one he possesses, he was clearly in a position to be
able to dictate the future of worldwide energy policy, and that gave
him a stranglehold on our economy and on that of most of the other nations
of the world as well," he noted. Cheney insisted that the US had
no choice but to employ military force in the defense of Saudi Arabia
and other friendly states in the area.
Once Iraqi forces
were driven from Kuwait, the US adopted a policy of containment of Iraq,
enforcing severe economic sanctions and "no-fly" zones over
northern and southern Iraq to weaken the Saddam regime and to prevent
any new attacks on Kuwait and Saudi Arabia. At the same time, Washington
substantially expanded its military presence and bases in the Persian
Gulf area in order to facilitate future US military operations in the
region. Most importantly, the Department of Defense sent vast quantities
of munitions to Kuwait and Qatar so that troops could be rushed into
combat without waiting weeks or months for the arrival of their heavy
By early spring
of 2002, the Bush administration concluded that the policy of containment
was not sufficient to eliminate the threat Saddam posed to US interests
and that more aggressive action was required. Although Iraq's alleged
possession of weapons of mass destruction was cited as the main reason
for acting in this manner, Cheney gave equal importance to US energy
security in his much-quoted speech of August 26, 2002. "Should
[Saddam's] ambitions [to acquire weapons of mass destruction] be realized,
the implications would be enormous for the Middle East and the United
States," he told the annual convention of the Veterans of Foreign
Wars. "Armed with an arsenal of these weapons of terror and a seat
at the top of 10 percent of the world's oil reserves, Saddam Hussein
could then be expected to seek domination of the entire Middle East,
take control of a great portion of the world's energy supplies, [and]
directly threaten America's friends throughout the region."
Officials told the
public that oil had nothing to do with the motives for the March 2003
US-led invasion of Iraq. "The only interest the United States has
in the region is furthering the cause of peace and stability, not in
[Iraq's] ability to generate oil," White House spokesperson Ari
Fleischer said in late 2002. But a closer look at the administration's
planning for the war reveals a very different picture. In a January
briefing by an unnamed "senior defense official" on US plans
for protecting Iraqi oil fields in the event of war, the Pentagon leadership
revealed that General Tommy Franks and his staff "have crafted
strategies that will allow us to secure and protect those fields as
rapidly as possible in order to preserve those prior to destruction".
The senior official,
who presumably was Deputy Secretary Paul Wolfowitz, indicated that the
Bush administration sought to capture Iraq's oilfields intact to provide
a source of revenue for the reconstruction of the country. Under the
Saddam regime, Iraq was a major oil supplier to the US. It provided
an average of 566,000 barrels per day in 2002, or 5 percent of total
imports. Many in Washington hope to obtain far more oil from Iraq in
the future. According to the US Department of Energy, Iraq possesses
proven reserves of 112.5 billion barrels, more than any other country
except Saudi Arabia, and it is thought to possess another 200 billion
barrels in undeveloped fields. Iraq could become a leading oil supplier
in the decades ahead, if a stable government is established that opens
territory to exploitation by US firms.
Such an outcome
is far from assured. Policy makers face the challenge of ensuring that
Saudi Arabia and other gulf producers increase oil supplies enough to
meet growing US and international demand. Another challenge will be
protecting the Saudi regime against internal unrest and insurrection.
The need to increase
Saudi production is particularly pressing. With one-fourth of the world's
known oil reserves, an estimated 262 billion barrels, Saudi Arabia is
the only country other than Iraq capable of satisfying ever-increasing
petroleum demands. According to the Department of Energy, Saudi Arabia's
net petroleum output must grow by 133 percent over the next 25 years,
from 10.2 mbd in 2001 to 23.8 mbd in 2025, in order to meet anticipated
world requirements at the end of that period. Expanding Saudi capacity
by 13.6 mbd, which is the equivalent of total current production by
the US and Mexico, will cost hundreds of billions of dollars. It also
will create enormous technical and logistical challenges. Western analysts
believe the best way to achieve this increase is to persuade the Saudis
to allow substantial US oil-company investment. The Cheney report calls
for exactly that. However, any effort by Washington to apply pressure
on Riyadh is likely to meet with significant resistance from the royal
family, which nationalized oil holdings in the 1970s and is fearful
of being seen as overly subservient to the US.
The strong US ties
to the Saudi royal family are unpopular with the regime's many opponents.
Additionally, growing numbers of young Saudis have turned against the
US because of its close ties to Israel and what is seen as Washington's
anti-Islamic bias. It was from this milieu that Osama bin Laden recruited
many of his followers in the late 1990s and obtained much of his financial
support. After the attacks of September 11, 2001, the Saudi government
cracked down on some of these forces, but underground opposition to
the regime's military and economic cooperation with Washington persists.
Finding a way to eradicate this opposition while persuading Riyadh to
increase its oil deliveries will be one of the most difficult challenges
facing US policy makers in the years ahead.
Caspian Sea basin
Although the US
will remain dependent on oil from the Persian Gulf area for a long time
to come, officials seek to minimize this dependency to the greatest
degree possible by diversifying the nation's sources of imported energy.
"Diversity is important, not only for energy security but also
for national security," Bush declared on May 17, 2001. "Over-dependence
on any one source of energy, especially a foreign source, leaves us
vulnerable to price shocks, supply interruptions, and in the worst case,
blackmail." To prevent this, the administration's energy plan calls
for a substantial US effort to boost production in a number of non-gulf
areas, including the Caspian Sea basin, the West Coast of Africa and
The one that is
likely to receive greatest attention from policy makers is the Caspian
Sea basin, consisting of Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan,
Turkmenistan, Tajikistan, Uzbekistan and adjacent parts of Iran and
Russia. According to the Department of Energy, this area houses proven
reserves (defined as 90 percent probable) of 17 to 33 billion barrels
of oil, and possible reserves (defined as 50 percent probable) of 233
billion barrels. If the amounts were confirmed, they would constitute
the second largest untapped reserves after the Persian Gulf area.
To ensure that much
of this oil will eventually flow to consumers in the West, the US government
has made strenuous efforts to develop the area's petroleum infrastructure
and distribution system. The US first sought access to the Caspian's
oil supplies during the Bill Clinton administration. Because the Caspian
Sea is landlocked, its oil and natural gas must travel by pipeline to
other areas. Tapping the resources requires the construction of long-distance
was reluctant to see Caspian oil flow through Russia on its way to Western
Europe, since that would allow Moscow a degree of control over Western
energy supplies. Transport through Iran was prohibited by US law because
of that country's pursuit of weapons of mass destruction. So Clinton
threw his support behind a plan to transport oil and gas from Baku in
Azerbaijan to Ceyhan in Turkey via Tbilisi in the former Soviet republic
of Georgia. Before leaving office, he flew to Turkey to preside at the
signing ceremony for a regional agreement permitting construction of
the $3 billion Baku-Tbilisi-Ceyhan (BTC) pipeline.
on the legal and logistical aspects of procuring Caspian energy, the
Clinton administration also addressed the threat to future oil deliveries
posed by instability and conflict in the region. Since many of these
states were wracked by ethnic and separatist conflicts, the administration
initiated a number of military assistance programs aimed at strengthening
their internal security capabilities. This entailed providing arms and
training along with conducting joint exercises.
Building on Clinton's
efforts, the Bush administration sought to accelerate the expansion
of Caspian production facilities and pipelines. "Foreign investors
and technology are critical to rapid development of new commercially
viable export routes," the Cheney report affirms. "Such development
will ensure that rising Caspian oil production is effectively integrated
into world oil trade." Particular emphasis is placed on completion
of the BTC pipeline and on increasing the participation of US companies
in Caspian energy projects. The administration also sought to build
an oil and gas pipeline from Kazakhstan and Turkmenistan on the east
shore of the Caspian to Baku on the west shore to channel more energy
from Central Asia to the BTC system.
11, 2001 US involvement in the Caspian Sea basin and Central Asia had
been restricted mostly to economic, diplomatic and military aid agreements.
To combat the Taliban and al-Qaeda in Afghanistan, however, the Department
of Defense deployed tens of thousands of combat troops in the region
and established military bases in Kyrgyzstan and Uzbekistan. The administration
recalled some of these troops, but apparently plans to maintain bases
and a permanent military presence. This is supposedly intended to assist
in the "war against terrorism", but it is also to safeguard
the flow of petroleum. The administration deployed military instructors
to Georgia to provide counter-insurgency training for special units
that will eventually guard the Georgian segment of the BTC pipeline.
The White House
has high hopes for the development of Caspian Sea energy supplies, but
many obstacles remain. Some of these are logistical: until new pipelines
can be built, transport of large quantities of oil to the West will
be tough. Other obstacles are political and legal: the authoritarian
regimes that predominate in the former Soviet republics are riddled
with corruption and reluctant to adopt the legal or tax reforms needed
to attract large-scale Western investment. But when all is said and
done, the major problem facing the US is that the Caspian basin is no
more stable than the Persian Gulf. Any effort to ensure the safety of
energy deliveries will require the same sort of military commitments
that the US has long made to its principal energy suppliers in the gulf.
Another area the
Bush administration views as a promising source of oil is West Africa.
Although African states accounted for only about 10 percent of global
oil production in 2000, the Department of Energy predicts that their
share will rise to 25 percent by 2020. That will add 8.3 mbd to global
supplies, welcome news in Washington. "West Africa is expected
to be one of the fastest-growing sources of oil and gas for the American
market," the Cheney report observes.
expects to concentrate its efforts in Nigeria, its neighboring states
in the Gulf of Guinea, and Angola. As in the Caspian region, however,
US hopes to obtain additional oil from Africa could be frustrated by
political unrest and ethnic warfare. Indeed, much of Nigeria's production
was shut down during the spring of 2003 because of ethnic violence in
the Delta region, the site of much of Nigeria's onshore oil. Local activists
have occupied offshore oil facilities to bargain for community project
funding. Crime and vandalism have also hampered Nigeria's efforts to
increase oil production.
The US is not likely
to respond to these challenges by deploying troops. That undoubtedly
would conjure up images of colonialism, provoking strong opposition
at home and abroad. But Washington is willing to step up military aid
to friendly regimes in the region. Total US assistance to Angola and
Nigeria amounted to some $300 million in fiscal years 2002 through 2004,
a significant increase over the previous three-year period. In fiscal
2004, Angola and Nigeria also became eligible to receive surplus arms
under the Pentagon's Excess Defense Articles program. Meanwhile, the
Department of Defense has begun to secure rights for the establishment
of naval bases in the region, most notably in Nigeria and the islands
of Sao Tome Principe.
Finally, the Cheney
plan calls for a significant increase in US oil imports from Latin America.
The US already obtains a large share of its imported oil from the region.
Venezuela is now the third largest supplier of oil to the US, after
Canada and Saudi Arabia; Mexico is the fourth largest, and Columbia
is the seventh. As indicated by the secretary of energy, "President
Bush recognizes not only the need for an increased supply of energy,
but also the critical role the hemisphere will play in the administration's
In presenting these
aspirations to governments in the region, US officials highlight their
desire to establish a common framework for energy development. "We
intend to stress the enormous potential of greater regional energy cooperation
as we look to the future," Secretary of Energy Spencer Abraham
told the Fifth Hemispheric Energy Initiative Ministerial Conference
in Mexico City on March 8, 2001. "Our goal [is] to build relationships
among our neighbors that will contribute to our shared energy security;
to an adequate, reliable, environmentally sound, and affordable access
to energy." However sincere, these comments mask the fact that
the "cooperation" is essentially aimed at channeling more
and more of the region's oil supplies to the US.
The energy plan
emphasizes acquisition of additional oil from Mexico and Venezuela.
"Mexico is a leading and reliable source of imported oil,"
the Cheney report observes. "Its large reserve base, approximately
25 percent larger than our own proven reserves, makes Mexico a likely
source of increased oil production over the next decade." Venezuela
is considered vital because it possesses large reserves of conventional
oil and houses vast supplies of so-called heavy oil, a sludge-like material
that can be converted to conventional oil through a costly refining
process. According to the NEP, "Venezuelan success in making heavy
oil deposits commercially viable suggests that they will contribute
substantially to the diversity of global energy supply and to our own
energy supply mix over the medium to long term."
But US efforts to
tap into abundant Mexican and Venezuelan energy supplies will hit a
major snag. Because of a long history of colonial and imperial predation,
these two countries have placed their energy reserves under state control,
establishing strong legal barriers to foreign involvement in domestic
oil production. While they may want to capitalize on the benefits of
higher volume exports to the US, Latin American countries are likely
to resist more US participation in their energy industries and any significant
increase in oil extraction.
The NEP calls on
the secretaries of commerce, energy, and state to lobby their Latin
American counterparts to eliminate or soften barriers. However, in Mexico,
reform bills to ease entry of private oil companies have encountered
stiff resistance in Congress. In Venezuela, a new constitution adopted
in 1999 bans foreign investment in the oil sector, and in 2003, President
Hugo Chavez fired managers of the state-owned oil company Petroleos
de Venezuela SA who favored links with foreign firms.
military plans linked
In its pursuit of
petroleum, the US is intruding in the affairs of the oil-supplying nations.
In the process, it exposes itself to increased risk of involvement in
local and regional conflicts. This reality has already influenced US
relations with the major oil-producing nations and is sure to have an
even greater impact in the future.
At no point does
the NEP acknowledge this. Instead, it focuses on the economic and diplomatic
dimensions of the energy policy. However, the architects of the Bush-Cheney
policy know that ensuring access to some oil sources may prove impossible
without the use of military force. The administration's military strategy
takes up the slack with heavy emphasis on bolstering capacity to project
firepower to key battlefields abroad. "The United States must retain
the capability to send well-armed and logistically supported forces
to critical points around the globe, even in the face of enemy opposition,"
states its Quadrennial Defense Review.
These critical points
would necessarily include areas that are petroleum sources. Whether
or not the administration consciously linked energy with its security
policy, Bush undeniably prioritized the enhancement of US power projection
at the same time he endorsed increased dependence on oil from unstable
As a result, a two-pronged
strategy governs US policy toward much of the world. One arm of this
strategy is to secure more oil from the rest of the world, and the other
is to enhance the capability to intervene. While one of these objectives
arises from energy preoccupations and the other from security concerns,
the upshot is a single direction for US dominance in the 21st Century.
It is this combination of strategies, more than anything else, that
will anchor the US's international relations for years to come.
Klare, author of Resource Wars: The New Landscape of Global
Conflict and the forthcoming Petropolitics (Metropolis Books, 2004)
is a professor of peace and world security studies at Hampshire College
in Amherst, Mass.