The Persian Gulf & the Reality of Big Oil

Walter Russell Mead gives a thoughtful disquisition on the daunting complexities of the US and its dependence on Big Oil, though not, as urban legend and MSM cant would have it, on Middle East oil.

Few subjects matter as much as oil, the Persian Gulf and American foreign policy. But few subjects are less well understood. Even relatively sophisticated observers will attribute American interest in the Persian Gulf to Uncle Sam's insatiable thirst for crude, combined with an effort to gain lucrative contracts for American oil firms. The U.S. on this view is something like a global Count Dracula, roaming the earth in search of fresh bodies, hoping to suck them dry.

True, the security of America's oil supply has been an element in national strategic thinking at least since Franklin Roosevelt met with King Abdul Aziz in the waning days of World War II. And true, the U.S. government has never been indifferent to the concerns of the major oil concerns. But the security of our domestic energy supplies plays a relatively small role in America's Persian Gulf policy, and the purely commercial interests of American companies do not drive American grand strategy.

The U.S. today depends on the Middle East for only a small portion of its energy supplies. Still the world's third largest oil producer and holding large coal reserves, America is significantly less dependent on foreign energy sources than the other great economies. Imports account for 35% of U.S. energy consumption versus 56% for the European Union and 80% for Japan. Nearly half the oil and all the natural gas imported by the U.S. comes from the Western Hemisphere; sub-Saharan Africa supplies most of the balance. Only 17% of U.S. oil imports and less than 0.5% of our natural gas come from the Persian Gulf; 80% of Japan's imports come from the Gulf, and by 2015 70% of China's oil will come from the same source.

While U.S. import needs are projected to grow significantly, U.S. dependence on Persian Gulf energy is not, thanks largely to expected production increases in the Western Hemisphere and sub-Saharan Africa. U.S. energy imports from the Persian Gulf are expected to remain below 20% of total consumption. The oil market, of course, is global, and if something were to happen to the Middle Eastern supplies, prices would rise world-wide, and the U.S. economy would be seriously disrupted. But domestic supply is not the key to American interest in the Gulf........

Mead goes on to explain how the price of world oil is a key component, and the most important commodity component, of the world's economy. Then he stresses that American dependence on relatively inexpensive oil means that Persian Gulf security is paramount to keeping a monster-spike increase in oil prices from occurring due to
Islamist religious Luddites eager to harm the advanced industgrial economies and heedless of the damage to Arab & other Muslim economies.

The end of America's ability to safeguard the Gulf and the trade routes around it would be enormously damaging--and not just to us. Defense budgets would grow dramatically in every major power center, and Middle Eastern politics would be further destabilized, as every country sought political influence in Middle Eastern countries to ensure access to oil in the resulting free for all.

The potential for conflict and chaos is real. A world of insecure and suspicious great powers engaged in military competition over vital interests would not be a safe or happy place. Every ship that China builds to protect the increasing numbers of supertankers needed to bring oil from the Middle East to China in years ahead would also be a threat to Japan's oil security--as well as to the oil security of India and Taiwan. European cooperation would likely be undermined as well, as countries sought to make their best deals with Russia, the Gulf states and other oil rich neighbors like Algeria.

America's Persian Gulf policy is one of the chief ways through which the U.S. is trying to build a peaceful world and where the exercise of American power, while driven ultimately by domestic concerns and by the American national interest, provides vital public goods to the global community. The next American president, regardless of party and regardless of his or her views about the wisdom of George W. Bush's invasion of Iraq, will necessarily make the security of the Persian Gulf states one of America's very highest international priorities.

The high price of oil is the reason Vladimir Putin was Time's Man of the Year. Historians have neglected the fact that King Fahd's decision to go off the two-tier pricing system in the mid-eighties to allow oil prices to subside to $18/bbl was as important as Afghanistan in bringing the USSR to its economic and military knees.

Mead's glancing allusion to FDR's meeting with King Abdul-Aziz was also an indication that a continuing close relationship of America with Saudi Arabia will be a most important element of stability & security in the Persian Gulf.