(Sample Essay) Oil Politics and US Imperialism by Vivek Kumar Singh

By: Vivek Kumar Singh
Course Coordinator
Essay Programme
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The U.S. game plan, since the oil shock of 1973, has been to control the oil market by keeping the focus on the West Asian region. Jimmy Carter, in 1980, as President of the United States ,declared the Persian Gulf an exclusive zone of American influence and created a Rapid Deployment Force, which later became the U.S. Central Command, or CENTCOM.

Oil imperialism rests on our continued dependence on oil, which not only threatens the future of humanity through prolonged and bloody conflict, but through another even more insidious threat--climate change and ecological collapse.Oil is not only an indicator of the international economy’s direction, it also sets the stage for political alliances, military posturing and lives and deaths of millions as countries rush to secure energy supplies in the ruthless, zero-sum game of nations. Being the largest energy consumer, in addition to boasting the world’s biggest military, the US naturally takes the lead in deciding the future, be it through negotiations, sanctions, or outright war. Critics of oil imperialism theories suggest that because the United States is the third largest oil producer, and that it has historically been the leading oil producer in the world, the United States would be unlikely to predicate its foreign policy on the acquisition of oil with such an undue focus. They point out that, relative to its consumption rate, oil is not an expensive commodity in the market The U.S. invasion of Iraq to loot its oil and politically restructure the Middle East, is part of a policy of militaristic imperialism that the American and British ruling circles have been engaged in for several centuries.

The Oil policy of the United States is determined by federal, state and local public entities in the United States, which address issues of Oil production, distribution, and consumption. Oil policy may include legislation, international treaties, subsidies and incentives to investment, guidelines for Oil conservation, taxation and other public policy techniques. Oil is the world’s most important traded commodity and its significance will only increase as developing nations, from China to Brazil, demand more energy. The move to higher prices will have a profound impact on the global economy, acting as a tax in consuming countries, depressing growth worldwide and pushing inflation higher.

Oil politics have been an increasingly important aspect of diplomacy since the rise of the petroleum industry in the Middle East in the early 20th century. Every president since Richard Nixon has asserted that we are running out of oil. Meaning: We are sitting ducks for those who brandish the oil weapon. To keep the evildoers at bay, the government must adopt policies that ensure our energy independence. Both George W. Bush and his challenger John Kerry worship at this altar. In the century-and-a-half since Edwin L. Drake drilled the first oil well, the history of the oil industry has been a story of vast swings between periods of overproduction, when low prices and profits led oil producers to devise ways to restrict output and raise prices, and periods when oil supplies appeared to be on the brink of exhaustion, stimulating a global search for new supplies. This cycle may now be approaching an end. It appears that world oil supplies may truly be reaching their natural limits. In the years to come, the search for new sources of oil will be transformed into a quest for entirely new sources of energy.

The following are some factors that affect the prices of oil:

1. These prices are affected by supply and demand because, at present, oil trades in a global commodity market where increased demand or reduced supply in one place instantly translates into price shifts everywhere.
2. Even if there were significant sources of high quality oil remaining, it is getting increasingly difficult and expensive to drill. These factors, along with aging infrastructure for oil exploration and a retiring workforce are also contributing to high oil prices.
3. Again, oil traders are fearful that the supply will not remain stable forever.

Up until the 1910s, the United States produced between 60 and 70 percent of the world's oil supply. As fear grew that American oil reserves were dangerously depleted, the search for oil turned worldwide. Oil was discovered in Mexico at the beginning of the twentieth century, in Iran in 1908, in Venezuela during World War I, and in Iraq in 1927. Many of the new oil discoveries occurred in areas dominated by Britain and the Netherlands: in the Dutch East Indies, Iran, and British mandates in the Middle East. By 1919, Britain controlled 50 percent of the world's proven oil reserves.

After World War I, a bitter struggle for control of world oil reserves erupted. The British, Dutch, and French excluded American companies from purchasing oil fields in territories under their control. Congress retaliated in 1920 by adopting the Mineral Leasing Act, which denied access to American oil reserves to any foreign country that restricted American access to its reserves. The dispute was ultimately resolved during the 1920s when American oil companies were finally allowed to drill in the British Middle East and the Dutch East Indies.

The fear that American oil reserves were nearly exhausted ended abruptly in 1924, with the discovery of enormous new oil fields in Texas, Oklahoma, and California. These discoveries, along with production from new fields in Mexico, the Soviet Union, and Venezuela, combined to drastically depress oil prices. By 1931, with crude oil selling for 10 cents a barrel, domestic oil producers demanded restrictions on production in order to raise prices. Texas and Oklahoma passed state laws and stationed militia units at oil fields to prevent drillers from exceeding production quotas. Despite these measures, prices continued to fall.

In a final bid to solve the problem of overproduction, the federal government stepped in. Under the National Recovery Administration, the federal government imposed production restraints, import restrictions, and price regulations. After the Supreme Court declared the NRA unconstitutional, the federal government imposed a tariff on foreign oil.
During World War II, the oil surpluses of the 1930s quickly disappeared. Six billion of the seven billion barrels of petroleum used by the allies during the war came from the United States. Public officials again began to worry that the United States was running out of oil.

It seemed imperative that the United States secure access to foreign oil reserves. Increasingly, policy makers and the oil industry focused their attention on the Middle East, particularly the Persian Gulf, which they believed would become the center of postwar oil production. As early as the 1930s, Britain had gained control over Iran's oil fields and the United States discovered oil reserves in Kuwait and Saudi Arabia. After the war ended, Middle Eastern oil production surged upward. Gradually, American dependence on Middle Eastern oil increased.

During the 1950s, a combination of cheap fuel and a burgeoning consumer culture led to an orgy of consumption. With only six percent of the world's population, the United States accounted for one-third of global oil consumption. Foreign oil was so cheap that coal-burning utilities made the expensive shift to oil and natural gas. World oil prices were so low that Iran, Venezuela, and Arab oil producers banded together in 1960 to form OPEC, the Organization of Petroleum Producing States, a producers' cartel, to negotiate for higher oil prices.

Arab nations used the oil weapon collectively to pressure the U.S. into forcing Israel to agree to a ceasefire.The important reason why the U.S. went into Iraq was to gain control of its oil. The assumption was that once the U.S. established control over the Iraqi oil sector, it would be able to control OPEC's ability to manipulate energy prices. Iraq has the third largest known reserves of oil after Saudi Arabia and Iran. However, things have not gone according to the American blueprint for Iraq. The Shia-dominated Iraqi government is no quisling of the U.S.; it strives to maintain equidistance from Washington and Teheran. The vast Iraqi oil reserves still remain untapped. Oil production under Saddam Hussein was higher than what it is now and attacks on pipelines by the resistance forces continue to happen sporadically.

In Afghanistan, the American dream was to build a gas pipeline that would carry Central Asian gas to lucrative markets in India and beyond. The ongoing attempts to destabilise Iran are motivated primarily by the desire to control that country's hydrocarbon assets. The Central Intelligence Agency (CIA)-engineered coup against the democratically elected government of Mohammed Mossadegh in 1953 took place after the nationalisation of the Western oil companies. The oil companies were against nationalisation after the revolution that toppled the Shah in 1979. The West was quick to impose economic sanctions on the country. The CIA-backed coup attempt against Hugo Chavez in 2002 was also aimed at reversing Venezuelan state control over hydrocarbon assets.

Russia, realizing its weaker position vis-a-vis the United States, has been making noises as if it fully agreed with the U.S. incursions in Afghanistan. But Russia has joined the Shangahi Cooperation Organization (SCO) which includes China, Russia, Kazakhstan, Kyrgyzstan, Takijistan and Uzbekistan. China is using the SCO to try to align Russia economically and politically towards China and northeast Asia. Russia's membership in the SCO is an attempt to maintain its traditional hegemony in Central Asia. The underlying rationale of the SCO is the control of its members' enormous reserves of oil and gas. India, Pakistan and Iran have “observer status” in the SCO and hope to become full-fledged members in the near future.

Despite the misgivings of Russia, China, India, or any other nation, Afghanistan and Iraq will now become the base of operations in destabilizing, isolating, and establishing control over the South Asian regimes and the Middle-East. [Note that Iran stands between Iraq and Afghanistan and you can understand why Bush II included Iran in the "Axis of Evil."] After the conquest of this area is complete and the permanent military posts are set up, they will begin construction of a pipeline through Turkmenistan, Afghanistan, and Pakistan to deliver petroleum to the Asian market.

Washington's numerous attempts at toppling or assassinating the Libyan leader Muammar Qaddafi were closely linked to the desire to take control of Libya's oil.The question of what comes after Qaddafi became more complicated as rival claims to forming a provisional liberated government emerged. Documents of the U.S. State Department accessed by WikiLeaks show that Washington was highly critical of the Libyan government's “resource nationalism”. The Libyan rebel leadership seems to have assured Washington that a post-Qaddafi Libya will be a safe place for the big oil companies to rake in profits.Former Justice Minister Mustafa Abdel-Jalil had announced from Benghazi that he would head an interim government. But human rights attorney Abdel-Hafidh Ghoga said from Benghazi that an interim government was being formed for all of liberated eastern Libya, and disputed Abdel Jalil’s claim of leadership. The new council will form a paramilitary to take further territory away from Qaddafi’s forces, Ghoga said.

Some 80% Libya’s developed petroleum fields are in rebel-held territory, and the Benghazi leadership is making plans to pump the oil and receive the proceeds. If the standoff with Qaddafi goes on very long, the oil politics could prove decisive. With Qaddafi’s own foreign funds increasingly frozen, and 3/4s of the country’s oil facilities idled (it ordinarily exports 1.7 million barrels a day), his cash on hand to pay mercenaries and bribe clients will rapidly decline, whereas the Benghazi rebels may reap a windfall. Reports about the situation at the oil fields are chaotic and contradictory, but it seems clear that some oil workers are pumping the oil themselves as expatriate companies flee, and it is possible that the Benghazi leadership could export by tanker truck despite the closing of the Italian pipeline.

According to Professor Michael Klare, an American expert on global oil politics, the American military has been transformed into a “global oil-protection” service for the benefit of U.S. corporations and consumers, fighting battles overseas and establishing bases all over the world. The U.S. Army, which is engaged in wars in Iraq, Afghanistan and Libya at present, is itself one of the biggest consumers of oil. Klare writes that Pentagon's annual consumption of oil for its Afghanistan operation is more than the annual petroleum usage of Bangladesh, a country with a population of more than 150 million.
America has a massive commercial interest in oil and natural gas, two resources concentrated in the Persian Gulf. While the oil majors control relatively little of the oil produced in the Middle East, they control virtually all of the gasoline, diesel, and other products refined and sold in the United States. Most U.S. oil now comes from outside U.S. borders. (The U.S. produces less oil domestically than any time since Truman was re-elected.) American leaders have consistently said that the flow of oil from the Gulf is a strategic concern for the United States.

This means that, whatever else happens, so long as Americans consume gasoline (and perhaps, in the future, liquid natural gas) there will be a major U.S. military presence in the Middle East. That's costly, and leads inevitably to wars. Remember bin Laden's repeated statements about the intolerable U.S. presence in Saudi Arabia, if nothing else.Whether we acknowledge it or not, oil imperialism costs us mightily, as it cost Empires back in the day. You can point to the hundreds of billions (perhaps trillions) for the war, you can point to climate change, you can point to any number of costs -- and the alternatives would be cheaper.

As an alternative, the following recommendations would be helpful: Appropriate solutions include large-scale research, development, and implementation programs to improve the scalability of alternative sources of energy, other projects geared towards improving mass transit and carpooling programs across the country, providing incentives to buy smaller and more fuel efficient vehicles, and promoting a campaign to increase awareness about conservation.