The Energy Policy of Oil

It is always a little amazing to me to realize how little Americans understand about energy policy and how it is orchestrated in this country. The fact of the matter is that our country is in danger of becoming a third world country in terms of economic development and much of the reason for this fall can be traced to our energy policy. The rise of American power during and after WWII is closely related to the fact that we utilized and owned the most efficient energy source in the world at the time; Oil. It is worth remembering that our actual involvement in the war itself came about as a direct result of our energy policy.

In the early months of 1941 the United States was trying to steer clear of conflicts in Europe while at the same time keeping a wary eye on developments. At the same time Japan, still incensed over what it considered to be slights at the end of WWI, was steadily striving to increase its security in the Far East and the Pacific Rim. Japan had been one of the Allies during WWI but at the end of the war had initially been denied the gains that it had made in China and other areas of the Pacific Rim. When Japan threatened to walk out of talks with the Allies as they were dividing up the spoils of the war, Britain had intervened on her behalf. Still, the American contingent under Wilson was not happy with the whole scenario and steadily pressured Britain after the war to drop support for Japan as a partner. Japan saw American opposition as very threatening, more especially since Japan had earned the enmity of some powerful enemies in supporting the Allies in WWI. China and the Soviet Union were very close and very powerful in Japan’s eyes and without allied support as trading partners and suppliers of raw materials needed to keep building up their defensive powers Japan felt ever more exposed with each effort by Americans to isolate them.

Unlike the United States, Japan was wholly without the raw materials of steel and iron needed to build a navy or an army. It was also completely without the oil that it needed to keep its basic economy going without importing it from outside sources. American efforts to isolate Japan were seen by the Japanese as threats to its very existence and it reacted accordingly. As the rest of the world became enthralled with watching the exploits of Nazi Germany in Europe, Japan began expanding her borders and subsidizing her military buildup by colonizing the far east just as Western powers had done for much of the preceding century. Japan saw it not in the light of economic development but in the light of survival of their nation. As Japan began to invade Manchuria and then later China itself, the western powers became more concerned with Japanese ambitions. These concerns were sharpened further by the abject brutality of Japanese invasions which often included the wholesale slaughter of civilians.

By early 1941 relations with Japan had reached a crucial stage with Roosevelt and the American government determined to discourage further Japanese military expansion and Japan just as determined to continue what it considered to be tactics necessary for its survival as a nation. The American government decided to set up an embargo on industrial products that Japanese needed to continue their expansion. These included steel and other raw materials but even more critically, they included oil. The Japanese were dependent on foreign sources for fully 80% of their oil supply. This oil supply not only powered the Japanese military but also the whole Japanese economy. Without this critical oil supply the whole economy would collapse internally and Japan would no longer be able to feed or clothe its people.

Naturally, the Japanese reacted to this oil embargo with great alarm. They first tried to cut a deal with the American government. Japan offered to give up part of its expansion plans in return for American support of many of it conquests already achieved. With publicity of Japanese atrocities in the Pacific Rim and China getting more exposure daily these requests for compromise fell on deaf ears with the United State government insisting that all expansion activities cease as well as the return of lands the Japanese had already conquered. Facing the prospect of a total collapse and realizing that there was no compromise position that the US would agree to that would be palatable to the Japanese public the war hawks in Japan took over the government and began making plans of how to neutralize American power in the Pacific Rim until Japan could seize control of the supplies that it needed from the region.

Pearl Harbor was the almost inevitable result of this oil embargo. Japan had no delusion of being able to conquer the United States but it did believe it could cripple American power in the Pacific Rim long enough to seize control of the area and assure Japan’s access to oil and other raw materials it needed to survive. With the choice between collapse and war, Japan chose war and the United States was involuntarily dragged into the middle of WWII. With hindsight it is easy to see the chain of events that led to Japan attacking Pearl Harbor. In 1941 of course, this chain of events was much harder to see and very few people believed that events would lead to such an attack. However, it is without question that it was the Japanese need for oil that was at the core of the reasons for the attack. Japanese sources within the government at the time point this out repeatedly in their explanations for the attack. A country dependent upon foreign oil for its very survival will often be forced to make decisions that are antithetical to its basic moral views and the United States is no exception.

In 1940 the US was one of the main producers of oil in the industrial world. US oil companies operated in the world market with great freedom and the US still owned a large portion of the world’s known supply of oil. However, since that time with the exponential growth of the usage of oil for agricultural production and an industrial sector that was the envy of the rest of the world the US gradually used up its own supply of oil and began being more dependent on other sources of oil. Along with this change, smaller third world countries that had up to this point welcomed US expertise and US oil companies into partnerships to produce oil in their countries began taking over ownership of their own oil reserves. This is a pattern that repeated itself in South America, Indochina, and the Middle East with unerring accuracy.

By the late 1960’s the US found itself in the unenviable position of being the biggest consumer of oil while its own reserves were steadily being used up. By 1970 most US sources of oil were peaking in production with a sharp downside to the supply curve that spelled major economic problems for an economy completely dependent on oil for survival. While this was not unpredictable and the US had foreseen the necessity of maintaining a presence in the largest oil reserve area of the world after WWII, it soon became obvious that even minor disruptions in this supply would cause major upheavals in the US economy. The Oil Embargo of OPEC nations of the Middle East in the early seventies were a precursor to what the US government understood to be a deadly source of destruction for US economic concerns.

After WWII the Allied powers basically split up and reordered the landscape in the Middle East based upon their own individual needs for oil and the fact that this area of the world happened to be the largest known supply of the commodity. Almost all political decisions in the Middle East since that time have been based upon the underlying fact that western economies are dependent on a steady supply of these reserves of oil. The US found itself forced to deal with governments in the region that were both antithetical to our moral values and some of the worst violators of their own people that the world has ever seen. How else can one justify America’s undeniable support of regimes in Saudi Arabia, Iran, Iraq, Afghanistan, Jordan, Syria, and Egypt that were both brutal violators of basic human rights and at different times dangerous and tribal based aggressors in both internal and external wars that have consumed the area for much of the last seventy years. We have installed dictators, fomented wars, and supported brutality in the area since WWII that is as bad as has ever been seen on the planet. Even today, we lament the brutality of Saddam Hussein while forgetting that we helped put him in power to act as a buffer against radical Islamic groups in Iran. We support brutal dictatorships in Kuwait and Saudi Arabia who regularly fund terrorist organizations that mindlessly attack innocents all over the world. We rage against Iran for her own abuses while at the same time that we support governments in Jordan, Pakistan, and Egypt with equally appalling records of human right violations against their own people.

Any real accounting of the cost of this oil dependency has to include the military costs that we have expended in the region in 3 separate wars in the last 20 years. If we add the cost of these wars to the cost in dollars per gallon in oil that we import; is oil still the most efficient energy? I don’t understand why Americans would continue to insist that we have no energy alternative when faced with the real costs in military incursions and increased national security measures that became necessary after 9-11. We must remember that it was our need for oil that got us involved in the area to begin with. It is our need for oil that keeps us embroiled in political issues in the area that should be reprehensible to every American. Without oil we have no need to have a presence in Saudi Arabia, Iraq, Iran, or Afghanistan. Since we are the biggest consumer of oil in the world we have the ability to bring about the collapse of these regimes. We can easily remove their ability to afford war by simply removing ourselves from the equation. We cannot do away with demand for oil in the rest of the world but we can devastate the demand markets by simply finding other sources of energy; sources that don’t force us to support brutal dictatorships or tribal based hatreds.

All of this leads us to the place where I started this post. We are now in the same position that Japan found itself in previous to WWII. We are completely dependent on oil from foreign sources. The only difference is that we are dependent not upon the United States or Great Britain, we are dependent upon brutal regimes that we would not otherwise do business with for any amount of money. While we don’t import 80% of the oil that we use, we do import 55% of the oil that we use from outside sources. What that means of course is that we are extremely dependent on outside sources for the well being of our economy and that in itself should be enough to convince Americans that we need to find a better solution without even bringing up the fact that many of these outside sources are diametrically opposed to our moral viewpoints. There was a commercial on TV when the government was trying to drum up support for the war against terrorism that suggested that Americans buying drugs were inadvertently and indirectly supporting terrorism. A more accurate statement would be that Americans support terrorism by directly funding its sponsors every time we fill up our SUV at the gas pump.