Tithing at the Crude Altar

Author
Michael T. Klare
Content Type
Journal Article
Journal
The National Interest
Volume
102
Issue Number
0
Publication Date
JULY/AUGUST 2009
Institution
Center for the National Interest
Abstract
PRESIDENT BARACK Obama has often stated that one of his highest priorities is to vanquish the "tyranny of oil" by developing alternative sources of energy and substantially reducing America's reliance on imported petroleum. But we will not be energy independent for the next thirty to forty years, even with a strong push to increase energy efficiency and spur the development of petroleum alternatives. During this time, America will remain dependent on oil derived from authoritarian regimes, weak states and nations in the midst of civil war.
Topic
Government
Political Geography
Africa, United States, Iraq, America, Middle East
PRESIDENT BARACK Obama has often stated that one of his highest priorities is to vanquish the "tyranny of oil" by developing alternative sources of energy and substantially reducing America's reliance on imported petroleum. But we will not be energy independent for the next thirty to forty years, even with a strong push to increase energy efficiency and spur the development of petroleum alternatives. During this time, America will remain dependent on oil derived from authoritarian regimes, weak states and nations in the midst of civil war. Less and less crude will come from reliable suppliers in the Western Hemisphere. Given our continued dependence on imported oil, picking and choosing among our suppliers obviously would be ideal. But this is not an option. The oil market is thoroughly internationalized. Key traders draw on multiple sources of crude to satisfy the needs of refiners and retailers. Most importantly, a majority of the world's remaining oil is controlled by countries that are not democracies, do not honor the rule of law and are certainly not noted for their pristine human-rights behavior. If anything, our reliance on these producers is likely to grow as output in the older producing areas of the Western Hemisphere declines and more and more of the world's output is concentrated in Africa, the Middle East and the former Soviet Union. In the past, the United States made an implicit bargain with our foreign energy suppliers; we will protect your government, supply arms to your military and overlook your human-rights violations in exchange for preferred access to your oil outputs. These arrangements reduce our political leverage, our moral authority and our ability to bargain with these states on other issues. We must accept the reality of our continued oil dependence and reframe our relationships so that the market, rather than guns, bloodshed and dictatorships, governs trade in crude. Contrary to popular belief, these petro-regimes need the United States more than the United States needs them. The tyranny of oil can be stopped. ENERGY DEPENDENCE is our reality. At the beginning of 2009, the United States needed nearly three-fifths of its total oil supply to come from imports. To reduce this high level of reliance, most policy makers favor some combination of measures aimed at spurring conservation and expanding the supply of domestically produced fuels. These could include higher gasoline taxes, incentives for the acquisition of gas-electric hybrids or all-electric vehicles, the accelerated production of alternative fuels (such as liquids derived from shale, biomass and coal), the expansion of public transit and increased drilling in protected areas like the Arctic National Wildlife Refuge (ANWR) and the outer continental shelf. All of these proposals have their fair share of advocates and opponents. All, no doubt, will be examined closely by this and future administrations. But even if given a strong endorsement by Congress and the White House, every one of them poses significant obstacles of one sort or another, and so, no matter which menu of options is ultimately adopted, it will be several decades before they can achieve maximum effect. Unfortunately, no amount of wishful thinking can get us around the facts. Much hope has been placed, for example, on the development of advanced biofuels that can be derived from nonedible plant matter like switchgrass and straw and that can be manufactured by chemical means, rather than energy-inefficient cooking. But no such refineries are now in operation and it will be a decade or more before fuel of this type is available in large quantities. The full-scale development of other petroleum alternatives, such as coal-to-liquids (CTL) and biodiesel derived from certain strains of algae, is expected to take even longer. Boosting wind, solar and nuclear energy to produce more electricity for use by plug-in hybrids, all-electric cars and high-speed rail will also require trillions of dollars in new investment and take several decades to achieve. Thus, even in 2030, the Department of Energy projects that biofuels and CTL will provide a mere 14 percent of the nation's liquid-fuel supply, with petroleum providing the remaining 86 percent. And, because of the long-term decline in domestic oil output, imports will have to provide about half of all that petroleum. This is a crisis long in the making. U.S. domestic oil output reached its peak and began a long-term decline almost forty years ago. Back in 1972, America produced approximately 12.5 million barrels of oil per day and imported only 4.5 million barrels, so foreign crude constituted about one-fourth of the total supply. Since then, our oil consumption has continued to grow while domestic output has fallen, so the difference has had to be satisfied with ever-increasing quantities of imported petroleum. We crossed the 50 percent threshold of reliance on foreign oil in 1998 and have been heading toward 60 percent dependence ever since. Plans announced by President Obama to stimulate the development of petroleum alternatives will reverse this trend and possibly bring U.S. dependence back below the 50 percent threshold in a decade or so; but with domestic consumption continuing to rise, there will be no reduction in the actual volume of oil we must obtain from foreign suppliers. WHERE, THEN, will this oil come from? It will not come from allies; crude will come from barely tolerable and increasingly unreliable tyrannies. Until now, we have been very fortunate, securing a large share of our imported petroleum from more-or-less friendly suppliers in the Western Hemisphere-but these happy days are drawing to a close. In the fourth quarter of 2008, the United States obtained approximately 45 percent of its imported oil from Western Hemisphere sources, mainly Canada, Mexico and Venezuela. The more we look into the future, however, the less we can expect to rely on these countries to meet our import requirements. Canada's conventional oil output is expected to fall by half between now and 2030, from 2.1 to 1.1 million barrels per day, and while the production of unconventional fuels derived from tar sands (bitumen) could more than compensate for that decline, the high cost of producing these fuels and the various environmental hazards involved could cap production at but a few million barrels per day, limiting the potential benefit to America. Mexico presents a more ominous picture. Its net petroleum output is expected to fall below domestic demand by 2030, leaving zero oil for export to the United States. Venezuela will still be producing a surplus in 2030, but so much harm has been caused to its oil fields and production infrastructure by Hugo Chávez that the amounts available for export will not be sufficient to make up for the loss of Mexican supplies. Brazil is the one bright spot on this map. It is developing new fields in the deep waters off Rio de Janeiro that promise substantial additions to world supplies; however, Brazil is a fast-developing nation with huge energy needs of its own, so whether any of this new oil will be available for export to the United States remains to be seen. Bottom line, the Western Hemisphere's share of U.S. oil imports will shrink considerably over the next twenty years. This means that more and more of our imported oil will have to come from producers in central Asia, the Middle East and Africa. And among these suppliers, we will find ourselves increasingly dependent on a small constellation of producing countries with the unique capacity to satisfy rising world demand in the decades ahead. Only a dozen or so countries are capable of providing a significant surplus for export markets: Algeria, Angola, Libya, Nigeria and Sudan in Africa; Iran, Iraq, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates (UAE) in the Persian Gulf; and Azerbaijan, Kazakhstan and Russia in the former Soviet Union. The Persian Gulf states alone are expected to provide 31 percent of the conventional oil supply by 2030, while the former-Soviet states will provide about 18 percent and the African states 16 percent. All other suppliers are either in decline (e.g., Indonesia and the North Sea countries of Denmark, Norway and the United Kingdom), need all their oil for domestic use (e.g., China) or are too insignificant to make a difference. Iran, which certainly has the capacity to provide oil, doesn't even figure into this dire equation as long-running sanctions cut off the American market-not that Tehran would be a desirable supplier in any case. So, whatever our preferences, we will increasingly rely on these fourteen key producers. And this is where our problems begin. Although the United States maintains friendly relations with most of these countries, none are truly allies in the sense that Canada or Britain or Norway is a friend of the United States. Some are truly antagonistic-think Sudan and Russia-while others maintain "proper" ties with Washington yet allow the expression of virulently anti-American views by semiofficial voices within their territory; the government-financed Wahhabi clergy in Saudi Arabia is a perfect example. Factions within the Saudi ruling elite and those of the other Arab oil states have channeled funds to Islamic charities tied to al-Qaeda. Moreover, few of these countries provide adequate protection for basic human rights, and most remain hazardous territory for those speaking out on behalf of women or minorities. Although national elections are periodically held in a majority of them, none can be considered an authentic democracy. Corruption, cronyism and press censorship are almost universal. Far more serious, from our perspective, is the propensity for violence in these key producing nations from which more and more of our oil will come. Several, including Iraq and Nigeria, are at war or are suffering from ethnic and religious strife. This is no accident: although many of these countries suffer from long-standing social and economic cleavages, the production of oil inevitably adds to the strain by providing some sectors in society with immense wealth while leaving vast multitudes of poor outside the palace gates-and feeling even-greater deprivation (and resentment) than before the discovery of oil. In some cases, this leads to rebellion and military coup d'etat, as has occurred in Algeria, Iran, Iraq, Libya, Nigeria and Saudi Arabia; in some cases, to separatist struggles aimed at the creation of an oil-financed ethnic state, as in Angola's Cabinda Province and Iraqi Kurdistan. These upheavals frequently impact American foreign policy, with Washington pressured from one side or the other to provide arms, troops or diplomatic support-similar pressures can be expected in the future. In fact, it is to address this aspect of the dependency problem, rather than the absolute volume of U.S. oil imports, that Obama appears most driven to accelerate the development of petroleum alternatives. Within days of taking office, the president made his fears and priorities known: "America's dependence on oil is one of the most serious threats that our nation has faced. It bankrolls dictators, pays for nuclear proliferation, and funds both sides of our struggle against terrorism." There are other significant reasons for addressing the oil problem, he noted, including the threat of climate change and ever-shifting gasoline prices, but the challenges to our foreign policy remain the principal motive for moving in a new direction. AS THE reality of our growing dependence on unstable, corrupt regimes becomes increasingly irrefutable, and America's interactions with these governments more untenable by the day, now is the moment to reframe our relationships. It is common for politicians and pundits to describe our current situation as one in which we are subservient to a powerful master. We believe we have to give military backing and diplomatic support to oil suppliers in order to secure our crude. But this is misleading. And it is dangerous. Yes, our need for imported oil has continually grown because of a lack of will to exercise restraint or develop alternatives aggressively enough, but the decision, made over and over, to employ military and diplomatic tools rather than rely on market forces to secure foreign oil was a policy decision-not the product of need alone. American leaders have vigorously worked to establish diplomatic and military ties with key foreign oil producers; it is not oil-producing countries that demanded such support. That shows we are hardly the vassals in these relationships. And because of this penchant for treating oil as a unique commodity, we have denied ourselves a crude-oil market while embracing a crude-oil foreign policy. Now, we must let the market speak. We need not rely on costly and damaging nonmarket arrangements to gain access to oil. For those who doubt the efficacy of a policy that depends on the market, a couple of points of note. America is the number-one consumer of oil and will remain so for the foreseeable future. Just as we cannot afford to lose access to foreign supplies, these producers cannot risk losing access to the U.S. market. Most importantly, allowing market forces to prevail will leave us better-off. Rather than rely on a handful of favored relationships, with their inherent propensity for intrigue and cronyism, such an approach would favor the participation of multiple suppliers, enhancing competition among producing nations and increasing the options for consumer countries like the United States. Even if some of our traditional suppliers balk at this new regime and withhold crude from the market, temporarily boosting prices, this will only increase the temptation of other producers to augment their exports, bringing new oil into the market. Some of this new oil will be expensive-the new wells off the coast of Brazil are located in very deep waters and will require costly technology to bring on line-but the larger the number of suppliers, the greater the competition among them and the smaller the risk that a disruption in supply from any one or two will cause us severe economic hardship. The power of the market to work in this way has never really been considered when it comes to procuring crude because of our assumption that America's relationship with its foreign oil providers is one of vassal to liege. And though this may have secured our crude, it had far too many costs. Opposition to U.S. ties with local regimes or leaders has led to anti-American protest activity, terrorist strikes and insurgency. American backing of Middle East strongmen has left us wanting for potentially stable states and reliable partners. We can no longer afford to protect the tyrannical. THE POWER of the market leaves us with other-and better-options for procuring crude. By examining how petro-states have cost us our security, the need to escape this cycle of dependence and the means of doing so become clear. From as far back as Franklin D. Roosevelt American officials have sought to forge close ties with a select group of supposedly trustworthy regimes in the major oil-producing areas to supplement dwindling stocks of domestic oil. To cement these ties, moreover, U.S. leaders have, over time, constructed a dense web of diplomatic and military arrangements with the regimes involved, in some cases agreeing to ensure their survival against a variety of threats. It is these very relationships-rather than the regimes themselves-that have proven so difficult for the United States in recent years. Saudi Arabia remains our most significant and tortured of oil arrangements and the starkest example of why a policy course correction is of the utmost necessity. If current trends continue, the kingdom will become our primary source of crude in the near future. It is for this reason if no other that our distressed, tribute-paying relationship must be stopped. Back in February 1945, when President Roosevelt met with King Abdul Aziz Ibn Saud, the founder of the modern Saudi nation, aboard the USS Quincy while docked at the entrance to the Suez Canal, a tacit alliance was forged. Most historians agree that the two men decided the United States would obtain exclusive access to Saudi oil in exchange for a pledge to protect the Saudi regime against all enemies, foreign and domestic. Subsequent American and Saudi leaders have interpreted this arrangement in various ways, but all have endorsed its continuing validity. America clearly tied its own hands. The vassal-to-liege relationship was not a foregone conclusion. It is the United States that has helped organize and train Saudi Arabia's armed forces (including its internal security force, the Saudi Arabian National Guard), provided these forces with billions of dollars' worth of advanced munitions, built and occupied bases in the country, and, on more than one occasion, sent troops and planes to help defend the state. In October 1981, it was made explicit that U.S. support extends not only to defense against external attack but to protection of the royal family against internal revolt. Following the Islamic Revolution in Iran and a vaguely imitative revolt by Saudi extremists in Mecca, the uprising was crushed with American assistance. "We will not permit [Saudi Arabia] to be an Iran," President Ronald Reagan declared at a White House press conference. Yet if one is under the impression that somehow this codepedent relationship works to our benefit, think again. However welcomed it was by Saudi Arabia's feudal leaders, not all Saudis have looked upon this U.S. alliance with favor. Even within the House of Saud, there are some descendants of Abdul Aziz who view America through the lens of militant Islam, funding charities with links to jihadist groups of one sort or another. Far more consequential, some ordinary Saudi citizens have come to view the royal family as a corrupt tool of (what they perceive as) anti-Muslim, pro-Israeli American imperialism-and it is out of this seething cauldron of alienated and jihadist-minded Saudi dissidents that Osama bin Laden has recruited the foot soldiers for his terror campaign against the United States. Arguably, the biggest problem in Saudi-American relations is this "special" status of the U.S. link to the Saudi royal family. It is hard to conceive of any other such relationship in American foreign policy: one in which our pledge of military support extends to the male heirs of an absolute monarch. Though this arrangement does give us privileged access to Saudi oil, it has simultaneously exposed us to many dangers. It has put the royals themselves at risk, as they rely too much on the United States for protection and not enough on the support of their own population. And while it has kept the House of Saud in power for over half a century, it is not a recipe for permanent stability and so needs to be exchanged for something more durable and palatable. While the precise nature of a new U.S.-Saudi partnership would have to be worked out between the principals involved, the ultimate objective should be to normalize our bilateral relations. Essentially, this means abrogating that tacit alliance forged by President Roosevelt and King Abdul Aziz a half century ago. As it becomes clear to the royals that they no longer enjoy an automatic promise of protection by American forces against internal revolt, they will be forced to negotiate a new social contract with their population-one, presumably, that entails a greater degree of accountability to some form of representative body. This process may, admittedly, entail a certain amount of internal disequilibrium, but the end result should be a polity far more capable of withstanding the brutal challenges of the modern era. And, America would be liberated: instead of kowtowing to Saudi kings and princes, as they have for the past sixty-odd years, American presidents and secretaries of state could treat the royals with the proper ceremonial decorum they would show other foreign figureheads, like Queen Elizabeth, while reserving serious business for discussions with actual government officials. Yes, we would continue to seek access to Saudi Arabia's vast oil reserves on the best commercial terms available-but not at the price of unpalatable political favors. Let the Saudis seek such favors elsewhere if they wish, but as good businessmen they know that unhindered access to the American market is their premier objective; and if that means doing so on purely market terms, they will bow to the inevitable. EVENTUALLY, THE same approach should govern U.S. energy ties with Iraq. With the country already our sixth-largest crude supplier, American reliance on Iraq's oil is only forecast to increase over the next several decades. As conquerors, occupiers and government abettors, we are setting ourselves up to launch yet another corrupt venture in a long line of mistaken policies. The U.S. relationship with Iraq has its own tortured history, whose twists and turns need not be recounted here in full. But the general outline shows that here again we have cut a Faustian bargain. After the crippling economic blockade on Iraq failed to overthrow Saddam Hussein, the second President Bush launched his infamous war. When it came to the question of access to black gold, many in Washington (and in the boardrooms of U.S. oil companies) hoped that Saddam's ouster would also result in the privatization of Iraqi oil fields. But the insurgency and fighting among the various political factions over the allocation of petroleum revenues has largely prevented American companies from operating in Iraq. (A few independent firms have signed deals with the Kurdish regional authority to operate in areas under its control, but these agreements have not been given full approval by the central government in Baghdad.) Only when security conditions improve even further than they have already, and the various factions resolve their differences over the proposed hydrocarbons law, will it be possible for foreign firms to reenter the country on a significant scale and help restore its damaged but potentially prolific fields. The state which triggered one of our greatest military and political expeditions has proffered one of the least viable oil regimes-or so it appears. At present, with large numbers of American troops still occupying the country, any contract for oil drilling in Iraq signed by a U.S. company and the current government in Baghdad will be viewed by many, if not most, Iraqis as an illegitimate product of American domination. Only after the bulk of U.S. troops have departed and the Iraqi parliament has adopted a comprehensive oil law that enjoys widespread public support will it be possible for American firms to operate in Iraq without provoking this ire. In such an environment, American officials may-like those of other countries-assist national firms in negotiating contracts with the Iraqi Oil Ministry. But the nature of any such contracts and the terms of trade should be determined by the Iraqis themselves in accordance with prevailing market conditions. The chance for a new beginning should not be squandered. OF COURSE, many believe our corrupt relationships end at the Middle East's borders. Yet slowly but surely American leaders have forged dysfunctional bargains with every burgeoning petro-state. This is not just true of the usual suspects-Kuwait, Bahrain, Qatar and the UAE. It is true too of Angola, Azerbaijan, Kazakhstan and Nigeria. The list is so seemingly never ending because American leaders have sought to diversify the sources of our foreign oil, in particular by seeking additional crude from Africa and the Caspian Sea basin. Even as we attempt to free ourselves from the shackles of dependence on the Middle East, we continue to cut the same raw, codependent arrangements with our new partners, whereby the United States offers military assistance and diplomatic support for access to crude it would likely get anyway. It seems the obvious lessons have not been learned. Bill Clinton was the first top official to make a concerted effort to establish close ties with the newly independent oil states of the former Soviet Union. Long before other prominent leaders began proclaiming the virtues of procuring oil and natural gas from the Caspian basin, Clinton was nurturing ties with the region's new leaders. In August 1997, for example, he invited the then ruler of Azerbaijan, Heydar Aliyev, to Washington for a White House reception. By helping Azerbaijan to develop the Caspian's energy potential, he told Aliyev at the time, "we not only help Azerbaijan to prosper, we also help diversify our energy supply and strengthen our nation's security." Clinton wooed the leaders not only of Azerbaijan, but also Kazakhstan, Kyrgyzstan, Turkmenistan, Uzbekistan and Georgia-the latter an important transit state for the delivery of oil and gas via the new pipelines to be constructed across the Caucasus from the Caspian region to Turkey and the West. Here, more than anywhere, it was Washington that took the initiative in building ties with the emerging petro-states. Some sense of this can be gleaned from the testimony of Under Secretary of State Stuart Eizenstat before the Senate Foreign Relations Committee in October 1997 regarding efforts undertaken by the Clinton administration to bolster ties with these new nations: "Georgian President Shevardnadze, Azerbaijani President Aliyev, and Kyrgyz President Akayev visited Washington this summer [and] Kazakhstani President Nazarbayev will visit Washington in November. . . . The First Lady will visit Kazakhstan, Kyrgyzstan, and Uzbekistan in November." By all accounts, this sort of direct White House engagement continued in the years that followed as U.S. oil companies became more deeply involved in the production and transportation of Caspian energy. But the United States once again found itself making potentially costly assurances. These endeavors were accompanied by the provision of significant amounts of economic and military aid to the Caspian states-an effort that was stepped up after 9/11, when the Bush administration turned to a number of these countries for assistance in conducting the global war on terror. A similar process can be seen in U.S. ties with African oil producers. Here, too, American leaders have made a concerted effort to establish close ties with the leading suppliers, especially Angola and Nigeria, and to bolster these ties with military and economic assistance. Typically, such aid is intended to help these nations contend with domestic insurgencies and separatist movements, thus ensuring the uninterrupted production and export of oil. In justifying U.S. assistance to Nigeria, the State Department indicated in 2006 that that country is "the fifth largest source of U.S. oil imports, and disruption of supply from Nigeria would represent a major blow to U.S. oil security strategy." American concern over the safety of oil deliveries from Africa has also led to growing military cooperation with Angola. As these ties have multiplied, so has the need for expanded oversight of the many aid and training programs now under way in Africa, and this appears to have been a factor in the Pentagon's decision to establish a new regional command organization-the U.S. Africa Command, or AFRICOM-in 2007. As before, U.S. envoys could and should press for an unfettered, transparent market in hydrocarbon exports and assist where legal and appropriate in negotiating contracts between American firms and local energy companies. The emphasis, however, should be on allowing market forces to govern the commerce in oil, not political and military ties between the United States and the prevailing regime. WILL ANY of our overseas suppliers balk at this shift? Well of course, yes. Some petro-regimes, accustomed to favored treatment from Washington, might seek an alternative patron-China, perhaps-to replace the United States in this role. But given that the United States is the world's top oil consumer, it is hard to imagine that any major producer would risk America's wrath by taking steps that would endanger its long-term access to American consumers. And while Beijing might be tempted to benefit from any opening provided by such a move, the Chinese are also dependent on an open world market in oil to satisfy their domestic energy needs, and so are not likely to take any precipitous action that would jeopardize their access to this commerce. When all is said and done, the oil producers need to sell their output to us more than they need our patronage, and so any alteration in our ties with them that keeps the oil flowing is likely to be accepted in the long run. So it is evident that any effort to escape the "tyranny of oil" should be aimed less at diminishing American reliance on imports from any specific country or region than on altering the nature of America's relations with the suppliers involved. Henceforth, the goal of America's overseas energy policy should be to depoliticize and demilitarize U.S. ties with key producers and, to the extent possible, allow market forces to prevail. This means transforming much of the policy that has governed U.S. relations with key oil-producing states in the Middle East, Africa and the Caspian Sea area-stripping them of the "special" status they have long enjoyed in Washington and treating them like other countries in their respective regions. This may, at first, prove difficult for officials on both sides of the equation, but the long-run effects should be beneficial for all concerned. A reduction in U.S. military support for petro-regimes abroad should, in the end, dampen the intensity of anti-Americanism in many of these countries and reduce the risk of extremist violence. Of course, it is possible that the transition process itself will be accompanied by a degree of instability and opportunistic violence. This requires that any U.S. move to alter its ties with these regimes be done gradually, allowing the rulers involved sufficient time to negotiate a new modus operandi with political groups formerly excluded from participation in governmental affairs. Ultimately, the only sure strategy for eliminating the "tyranny of oil" is to reduce our consumption of oil, period. That will require a far more ambitious plan of conservation and alternative-fuel development than those now being discussed in Washington. Eventually, the need to dramatically reduce our carbon dioxide emissions and adjust to a world of declining petroleum output will force us to embrace such a sweeping plan. In the meantime, we will remain dependent on imported oil, and so unable to escape the blackmailing tactics of the petro-states. We must change our overseas energy behavior. If we do not, we will be the victims of our own making. Michael T. Klare is the Five College Professor of Peace and World Security Studies at Hampshire College and the author, most recently, of Rising Powers, Shrinking Planet: The New Geopolitics of Energy (Holt, 2009).