[lit-ideas] Let's talk about oil

//www.carnegieendowment.org/publications/index.cfm?fa=view&id=18276&prog=zgp&proj=zusr


Determining Factor: Oil And U.S. Diplomacy   
 
By John Judis  
The New Republic Online, April 26, 2006  
It's not fashionable to say this, but the Iraq war was
about oil. Not 
entirely, but certainly more than it was about weapons
of mass 
destruction or a link to Al Qaeda. The 1991 war with
Iraq was also 
about 
oil, and if the United States goes to war in the
future with Iran or 
with China, it will likely be about oil. 

Oil is a scarce resource that is vital to the American
economy. 
Domestic 
production peaked in the early 1970s. The United
States currently 
imports about 60 percent of its oil. World supplies
are expected to 
peak 
in a decade or so. Yet American oil consumption is
rising steadily--it 
went up by 3.9 million barrels a day between 1995 and
2004--and is 
almost matched by the rise in consumption from
China--2.8 million 
barrels a day during the same period. With demand
continuing to rise, 
and supply failing to keep pace, prices can be
expected to rise, and at 
a certain point to skyrocket. That could spell doom
for the American 
economy.

A whole range of enterprises--from agriculture to 
transportation--depend 
on oil. They'll have trouble surviving. Rising oil
imports, combined 
with the existing, and growing, trade deficit in
manufactured goods 
will 
drive up America's overseas debt, threatening the
dollar. If the dollar 
loses value to the Euro and other currencies, oil
producers will be 
tempted to denominate oil in other currencies, making
it more expensive 
for Americans to purchase. The trade deficit will rise
still further, 
threatening the abandonment of the dollar as the world
currency and the 
subjection of the United States to the same onerous
demands for budget 
cuts and tax increases as other countries that
perpetually run big 
trade 
deficits. 

The United States can ease or even halt this process,
but it won't be 
easy. Americans would have to agree to a program of
drastic 
conservation, particularly for automobiles. But that's
not a winning 
political program in a country built around cars,
suburbs, and 
highways. 
That leaves another, even more unsavory alternative:
The United States 
can seek privileged access to the world oil supplies
and prevent other 
countries from gaining similar access. That can lead
to war. 

The Bush administration's program for conservation is
nugatory. It 
consists of relying on technological breakthroughs
such as hydrogen 
cars. But the administration is also preparing for the
possibility of 
war. The Pentagon's Quadrennial Defense Review,
released this February, 
highlighted the threat of war with China. China, the
report said, "has 
the greatest potential to compete militarily with the
United States and 
field disruptive military technologies that could over
time offset 
traditional U.S. military advantages absent U.S.
counter strategies." 

In the administration's revised National Security
Strategy, released 
this March, the White House suggested war might break
out if China's 
leaders diverge from a "peaceful path" by "acting as
if they can 
somehow 
'lock up' energy supplies around the world" and
"supporting 
resource-rich countries without regard to the misrule
at home or 
misbehavior abroad of those regimes." Those are both
references to oil. 
Humanitarians might construe "resource-rich countries"
as a reference 
to 
China's arrangements with Sudan, but it more likely
refers to China's 
deals with Iran and Venezuela, two countries hostile
to the United 
States. (The Bush administration, which recently
rolled out the red 
carpet for Equatorial Guinea's Teodoro Obiang Nguema,
is certainly not 
punctilious about supporting misrulers.) 

Secretary of State Condoleezza Rice summed up the
challenge from China, 
Iran, and Venezuela in testimony in April before the
Senate Foreign 
Relations Committee. "We do have to do something about
the energy 
problem," she said. "I can tell you that nothing has
really taken me 
aback more, as secretary of state, than the way that
the politics of 
energy is--I will use the word 'warping'--diplomacy
around the world. 
It 
has given extraordinary power to some states that are
using that power 
in not very good ways for the international system,
states that would 
otherwise have very little power. It is sending some
states that are 
growing very rapidly in an all-out search for energy
states like China, 
states like India that is really sending them into
parts of the world 
where they've not been seen before, and challenging, I
think, for our 
diplomacy." 

China is rapidly building up its navy--not in order to
attack Taiwan, 
but to protect its oil routes to the Middle East. And
the United States 
is now following what it calls a "hedge" strategy
toward China. "It is 
U.S. policy to encourage China to emerge as a
responsible international 
partner," said Pentagon spokesman Bryan Whitman.
"However, there is 
also 
a lack of transparency and some uncertainty
surrounding China's future 
path. Therefore, we and others have to naturally hedge
against the 
unknown." Hedging in this case means a major naval and
air buildup in 
Guam. Pentagon official James Thomas described "the
hedging strategy" 
to 
The Washington Times. "We're looking at the
deployments of bomber 
elements to Guam on a more routine basis," he said.
"We're also looking 
at making adjustments in our naval posture globally,
shifting to six 
carrier battle groups in the Pacific region, given the
shift in global 
transport and trade, as well as over the next several
years shifting 
approximately 60 percent of our attack submarine fleet
to the Pacific." 

The U.S. nuclear deal with India was also all about
oil. The United 
States abrogated the nuclear non-proliferation treaty
by selling India 
nuclear materials that could be used for military as
well as civilian 
purposes. By using them in civilian reactors, India
would reduce its 
demand for oil, and by also using them to build bombs,
it balances 
China's power in Asia. It's win-win for the United
States. 

America's tensions with Iran are also basically about
oil. If they 
weren't, an Iranian nuclear weapon would not pose a
direct threat to 
the 
United States. Israel, too, has the means to deter
Iran. But by 
elevating Iran within the Persian Gulf, nuclear
weapons would put it in 
a position to influence other oil producers. (That was
part of the 
American fear with Saddam Hussein.) Iran has already
declared its 
intention to price its oil in Euros rather than the
dollars, although 
it 
doesn't yet have the financial superstructure, or the
support from 
other 
oil states, to do so. 

Why did the United States invade Iraq? Well, there
were lots of 
reasons, 
but one reason was to create a petroleum counterweight
to OPEC. 
Neoconservatives within the administration assumed
that a pro-American 
Iraq would quit OPEC, and, with its plentiful
reserves, drive down 
world 
prices. That didn't happen, of course. Now one reason
the Bush 
administration feels it must stay in Iraq is to
prevent the destruction 
of oil-rich Kirkuk in a civil war and to ensure that a
new Iraqi regime 
will not join Iran in attempting to frustrate American
oil needs. 

The United States could follow a different strategy,
combining drastic 
conservation at home with an attempt to work a new
international oil 
agreement that would prevent competition over supplies
giving rise to 
war. Call it green internationalism. But don't expect
the Bush 
administration to undertake either of these steps. And
don't, 
unfortunately, expect a cautious Democratic
administration to do so 
either. 

John B. Judis is a senior editor at The New Republic
and a visiting 
scholar at the Carnegie Endowment for International
Peace. 


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