Visiting Scholar Offers New Perspective on U.S. Thirst for Foreign Oil

The closer I looked at protecting the oil supply, the harder it was to understand what it was we thought we were protecting.”

In his January, 1980 State of the Union Address, President Jimmy Carter introduced policy that would define the United States’ relationship to the oil-rich Middle East for a generation.  The address, which came at the end of a decade that saw two Arab oil embargoes, long lines at U.S. gasoline pumps, and declining domestic oil production, laid out what would become known as the Carter Doctrine.  The message was that the United States would go to war to defend access to Middle East oil, which had become vital to America’s security and economy.  Within the White House, it was understood that even nuclear war was on the table.

The United States’ interest in the oil beyond its borders dates back at least a century.  American interventions to secure access to foreign oil have been the research focus of recent Kleinman Center visiting scholar Roger Stern.  Stern, who is an economist at the University of Tulsa, explores what he sees as the false premise underlying U.S. foreign oil policy in his new book-in-progress, “Oil and Armageddon,” which he discussed at the Perry World House in March.

Perception of Oil Scarcity

Stern argues that the U.S. government has used the perception of oil scarcity to drive an interventionist foreign policy that, most notably, led to U.S. involvement in the 1991 Gulf War, and earlier drove the U.S. to align itself with Iraq in its decade-long war against Iran.

Yet, Stern says, oil has never really been in short supply.

“Belief in imaginary scarcity is a large explanation for our interventions in the Middle East,” Stern says.  In “Oil and Armageddon” he writes, “Strangely, oil scarcity ideology has yet to be fully described, let alone challenged or discredited.  This book, I hope, begins that process.”

Stern stumbled upon an apparent discrepancy between real and perceived oil supply as a graduate student, while trying to determine the cost of American access to oil.

“The closer I looked at protecting the oil supply, the harder it was to understand what it was we thought we were protecting.”

Competing for Iranian Oil

During the oil-shocked 1970’s, a line of thinking developed in the White House, championed by Carter’s National Security Advisor Zbigniew Brzezinski, that the Soviet Union was fast running out of oil, Stern said.  To secure its future energy supply, the USSR would eventually seek to invade Iran to control its oil.  Brzezinski believed the Soviet invasion of Afghanistan in 1979 was the first step in that process.

Yet as Stern plumbed the University of Tulsa’s archive of 1970’s oil trade publications, he discovered that oil markets had ample supply. Brzezinski’s belief that Siberian wells would run dry was countered by the opposing view, which Stern says the White House ignored, that Russia scarcely understood the magnitude of its oil wealth.  In fact, the Soviet Union was at the time building an oil pipeline to deliver more crude to Europe.

Stern sees a parallel between perceived oil scarcity at the start of the 1980’s and earlier resource scares.

A History of Supply Scares

“I never would have imagined that I would learn such things, when I set out as a middle-aged graduate student, that there’s a pretty deep human tendency to worry about mineral supply,” Stern said.

“I traced this back to the late 1700’s, and there were British geologists who were telling their countrymen to get serious about conserving coal and finding it somewhere else so that it didn’t get taken.”  In the early 1900’s President Teddy Roosevelt warned that oil would run out within two decades, threatening the emergence of the U.S. navy that was in the midst of converting from coal to oil fuel.

More oil supply scares came about during the 20th century, in roughly 30-year cycles Stern says.  But the oil was always there.  “No one looked at the data; oil traders didn’t see scarcity.”  In fact, Stern points to market data showing that the 1973 Arab oil embargo, which led to infamously long gas station lines, didn’t actually lead to any real shortage of oil.  “The supply chain had been told that oil was running out.” That led refiners to hoard oil to defend their market share.

Stern points to the bigger implications of perceived scarcity.  President Carter’s 1980 State of the Union was the start of U.S. military force projection into the Middle East, and “the second longest deployment of U.S. force in U.S. history, second to the cold war,” he says.

But how could the President and his advisors have built foreign energy policy on assumptions that looked so removed from reality?  Stern says, in essence, that they paid too little attention to history.

“Transitory scarcity is a common feature in any market,” he says.”  Without knowledge of deepwater drilling, fracking, horizontal drilling, and other technologies that have opened up oil supply in the decades since, it would have been easy to see a future of scarce resources back in 1980.  Nevertheless, Stern doesn’t cut past leaders any slack.

“The trick that scarcity ideologists deceive themselves and others into believing was that this short-run scarcity was proof that their longer-term idea about disappearing resource was becoming reality.”

One open question is whether the current generation will fall to the same misperceptions that Stern says underlie past mistakes.  Maybe we’ve learned our lesson; maybe not.  But the growth of alternative sources of energy, such as wind, solar and the emergence of battery-powered cars, combined with strong U.S. oil production, might mean that oil is a little less important than in the past, and the need to secure supply around the globe less urgent.