Oil, Security, War: The Geopolitics of U.S. Energy Planning

by Steve Kretzmann

The Royal United Services Institute (RUSI) describes itself as a "professional forum for study of defense and international security."

Located in the heart of London, RUSI is an incubator for the latest defense establishment thinking. It is no great surprise to enter and find Robert "Bud" McFarlane, formerly Ronald Reagan's national security adviser, addressing a crowd of officers and bureaucrats.

The surprise last October was his message -- greater security for Great Britain and the United States will be achieved not by building and deploying more aircraft carriers and tanks in the Persian Gulf, but by increasing energy efficiency and automobile fuel economy at home.

National security would best be served, McFarlane argued, by focusing on reducing domestic demand for oil. Focusing on the supply of oil will prove "ultimately inadequate," concluded McFarlane, who once worked for the man who removed solar panels from the White House.

This is not your father's clean energy movement. At the symposium McFarlane addressed, there was little discussion of climate change or other environmental impacts of oil addiction. There was even less discussion of the human rights issues that have plagued oil projects from Nigeria to Colombia and Burma. The issue for McFarlane and the others at RUSI was simply national security.

After discussing various aspects of the costs of oil addiction, including the political and economic costs of maintaining security of supply, participants in the symposium then argued the case for a transition from oil as the principal source of portable fuels.

McFarlane and the RUSI may represent the future of national security approaches to energy, but they are not the present.

In fact, the Bush-Cheney administration is perhaps the ultimate expression of the "oil equals security" mindset. The administration's geopolitical strategy -- based in significant part on the threat or actual use of force -- in large part revolves around the perceived need to maintain access to oil reserves, particularly in the Persian Gulf, but around the world as well.

Beneath it All

To understand the politics of oil, it is important to understand both the geology and the industry. The world is definitely not running out of oil. Over the last 25 years, known reserves of oil have increased by almost 70 percent. If all new exploration for oil and gas were to stop tomorrow, the wells would not run dry for more than 40 years.

The amount of oil available is not simply a function of geology, but also of economics, technology and politics. Identified, or proven, reserves refer to oil and gas that have been discovered and remain in the ground, but could be extracted quickly and economically using today's technology.

Additions to reserves can take place as technological advances allow access to previously uneconomical oil, as has happened over the last decade with deep offshore technology, horizontal drilling and the increased use of advanced seismic mapping technology. Reserves growth also occurs during the production process, through the extensions of old fields or the discovery of new pools (fields) of petroleum. The price of oil or gas also has a significant impact on reserves estimates -- as price goes up, the higher cost of extraction from smaller, more marginal finds becomes more economically viable, and those fields are added to proven reserve estimates.

Possible reserves figures, which are cited as an indication of how much oil a region might hold for the future, are even more speculative -- although recent technological improvements have improved the reliability of these figures.

To further complicate the matter, both companies and countries have financial incentives to either over- or under-estimate the amount of reserves in their possession at any given time. It is a complicated business, and outside the United States, there are no agreed standards for reserves calculations.

In The New Economy of Oil, recently published by the Royal Institute of International Affairs, the authors put forth the useful concept of thinking of all the oil in the world as an iceberg. Visible above the water line are those reserves that are proven, and economically viable to extract today. Beneath the water are the much more vast reserves of conventional and unconventional sources of oil that will become economical as the price goes up and the technology evolves.

The Saudi Advantage

But while much of the world's oil may be beneath the metaphorical water line, two-thirds of it are in the Persian Gulf. As long as the world is dependent on oil, it will be dependent on the Persian Gulf. Production varies from year to year, as the United States might import more oil from Venezuela, Canada or Mexico -- but over the long run, it is the Persian Gulf nations that are sitting on the motherlode.

And one country, Saudi Arabia, holds just over one quarter of all the oil in the world. Saudi Arabia has proven reserves of 264 billion barrels of oil, and possible reserves that are estimated by the U.S. Energy Information Administration to be as high as one trillion barrels. The Saudis have the world's largest production capacity, and the largest excess production capacity. On a daily basis, Saudi Arabia currently produces 8 million barrels per day.

Perhaps more importantly, it is the only country that can, on short notice, produce an additional 2 million barrels a day. This means that when disruptions in supply occur -- for example, when the Venezuelan oil industry shuts down -- the Saudis are the only ones who can pick up the slack.

For these reasons, the oil market revolves around Saudi Arabia. For U.S. geopolitical strategists, this dependence on Saudi Arabia is a major vulnerability which fundamentally shapes U.S. military policy.

Oil = Security

On October 20, 1973, Saudi Arabia exercised the power it wields based on its dominant oil position, declaring an embargo of oil shipments to the United States in retaliation for assistance to the Israeli military. Other Arab nations quickly joined the embargo. They lifted the embargo in March of the next year -- but the power of the threat of that weapon has shaped U.S. energy and security policy since that time.

Three years later, President Carter's secretary of defense, Harold Brown, testified before Congress that "there is no more serious threat to the long-term security of the United States and to its allies than that which stems from the growing deficiency of secure and assured energy resources."

In January 1980, the lingering fear generated by the embargo, combined with events such as the Iranian Revolution and the Soviet invasion of Afghanistan, led U.S. strategists to draw a line in the sand.

In his last State of the Union address, Jimmy Carter stated that any "attempt by an outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States," and pledged to defend that interest by "any means necessary, including military force."

Five weeks later, the United States Rapid Deployment Joint Task Force (RDJTF) was formally established at MacDill Air Force Base in Florida. By the time Ronald Reagan took office, the RDJTF included 100,000 Army troops, 50,000 Marines, and additional Air Force and Navy personnel. In January 1983, the RDJTF became the U.S. Central Command (USCENTCOM), which 20 years later is overseeing the buildup of U.S. troops around Iraq.

Global War for Oil

Two decades after the establishment of USCENTCOM, the U.S. military has clearly positioned itself to assert the Carter Doctrine on a global scale.

In March 2001, newly appointed Energy Secretary Spencer Abraham unveiled the Bush/Cheney administration's process to create a new National Energy Strategy "founded on the understanding that diversity of supply means security of supply." In actuality, this strategy had been in place for more than a decade. Although energy planners know that there is simply not enough excess oil in the world to displace the central role of the Persian Gulf nations, they have sought to maximize sources of oil from elsewhere in order to diminish the power of the Gulf states.

Alternative oil suppliers immediately become, by definition, strategically important in the U.S. military calculus, and there is a striking correlation between the presence of oil and the deployment of the U.S. military globally.

• In Somalia, just before pro-U.S. President Mohamed Siad Barre was overthrown in 1991, nearly two-thirds of the country's territory had been granted as oil concessions to Conoco, Amoco, Chevron and Phillips. Conoco even lent its Mogadishu corporate compound to the U.S. embassy a few days before the Marines landed, with the first Bush administration's special envoy using it as his temporary headquarters.
• The Andean countries of Colombia, Venezuela and Ecuador together produce about 20 percent of the oil imported by the United States, more than two million barrels a day. Venezuela is often the top supplier of oil to the United States. Observers have long suspected that the oil in this region was a central motivation for the U.S. involvement in Colombia's civil war. In 2002, the Bush Administration allocated $98 million to deploy 60 to 100 Special Forces troops to train a "Critical Infrastructure Brigade" of Colombians for the explicit purpose of protecting an Occidental Petroleum pipeline.
• In the Caspian region, which may contain as much as 200 billion barrels in oil reserves, the U.S. military has been actively working to combat terrorism -- and to secure possible pipeline routes for the export of Caspian oil. In March 2001, the United States pledged $4.4 million in military aid to oil-rich Azerbaijan. Deputy Assistant Secretary of Defense Mira Ricardel said the aid was "to counter threats such as terrorism, to promote peace and stability in the Caucasus, and to develop trade and transport corridors." Azeri President Heydar Aliyev more specifically intermingled fighting terrorism and protecting oil pipelines, stating, "Guaranteeing the security of the Baku-Tblisi-Ceyhan and the Baku-Tblisi-Erzurum oil and gas pipelines is an integral part of our struggle against terrorism."
• In February 2001, Washington said it would provide the country of Georgia with $64 million in military support, and promised to dispatch 180 Special Forces "advisers" to train up to 2,000 Georgians in anti-terrorism techniques. According to an Interfax News Agency report, the Georgian Defense Ministry said that "servicemen trained under the U.S. Train and Equip program might help provide security for the [Baku-Tblisi-Ceyhan] pipeline."
• In 1997, BP and Halliburton (headed at the time by Dick Cheney) proposed the Trans-Balkan pipeline (TBP) that would provide another export route for Caspian oil via tanker to the Bulgarian Black Sea coast and through Skopje in Macedonia to Vlore, a port in Albania. Two years later, U.S. forces in southeast Kosovo began construction of Camp Bondsteel -- which has become the largest new military base since the Vietnam War. In December 2002, ExxonMobil and Chevron Texaco both announced they were considering participation in the Trans-Balkan pipeline.
• From Nigeria in the North to Angola in the South, West Africa holds in excess of 33 billion barrels of proven oil reserves, already supplies 15 percent of U.S. oil imports, and could supply one quarter of U.S. imports by 2015. In June 2002, a report from the private but well-connected "African Oil Policy Initiative Group" recommended that the United States declare the Gulf of Guinea a "vital interest," and that the United States "should strongly consider the establishment of a regional homeport, possibly on the islands of Sao Tome and Principe. Fradique de Menezes, the President of Sao Tome and Principe, announced in August 2002 that the United States had agreed to build a U.S. naval base in his country, though the Pentagon denies any such plans.

Iraq, oil, war and security

If "security of supply" is indeed the Bush-Cheney administration's goal, "securing" Iraq's oil goes a long way towards achieving it. Iraq holds the world's second largest reserves of oil, 11 percent of the world's known reserves. The U.S. Energy Information Administration estimates Iraq's possible reserves at 220 billion barrels, or approximately 80 percent of current proven Saudi reserves.

One concern in any invasion scenario is that war will lead to a temporary reduction in supply, as Iraqi operations go off line. Iraq sells approximately 2 million barrels a day on the global market under the "Oil for Food" program, and temporary loss of these supplies might send oil prices skyrocketing. Three quarters of Iraq's daily production comes from just two fields -- Kirkuk in the north, and Rumaila in the south. Robert Ebel, energy program director at the Washington, D.C.-based Center for Strategic & International Studies, has suggested that if U.S. Special Forces were to seize these two fields in the opening moments of a war, 75 percent of Iraq's oil could continue to flow onto a jittery oil market -- thus keeping prices from spiking too high.

In a post-Saddam Iraq, the country would quickly be in a position to dramatically increase production. If sanctions were removed and new drilling technology was brought in by U.S. companies, Iraq's production could rise from less than 3 million barrels a day currently to 6 million or perhaps even 8 million barrels a day by 2010.

If a post-Saddam Iraq's production increases as expected over the next decade, Iraq will be an insurance policy against Saudi Arabia. Increased Iraqi production will certainly lessen the power of Saudi Arabia to manipulate the global oil market, and could even serve as a buffer in event of an unexpected loss of Saudi supplies.

U.S. oil companies will almost certainly benefit from a "regime change" in Iraq. Ahmed Chalabi, the leader of the Iraqi National Congress (the most prominent opposition group), has said that "American oil companies will have a big shot" and that he favors the creation of a consortium of U.S. oil companies to develop Iraq's oil.

U.S. officials have consistently and vehemently denied that oil is a motivation in the buildup to war. On "60 Minutes," Secretary of State Donald Rumsfeld was asked if the war was about oil and responded, "Nonsense. It just isn't. There are certain things like that, myths that are floating around. It has nothing to do with oil, literally nothing to do with oil."

But almost no one takes that claim seriously. Whether oil is the most important factor in going to war, or merely one of many considerations, it is plain that the U.S. obsession with Iraq is due in significant part to the country and region's oil reserves.

For Bush and Cheney, national security clearly involves using the military to control the global diversity of oil supply needed by the world's largest oil consumer, the United States. This view makes sense if you believe that there are no viable alternatives to oil.

Thirty years ago, when the oil embargo shocked the United States, or 20 years ago, when the Carter Doctrine was just taking hold, alternative energy was in its infancy. Today, however, auto companies are mass producing hybrid cars, and prototype hydrogen fuel cell vehicles are being driven in California. Testifying before Congress recently, former CIA Director James Woolsey spoke out strongly in favor of alternative energy technology, noting that "there is no incompatibility between being a hawk and being a green." While that may be true, it is hard to imagine that the U.S. global strategists would perceive vital national interest in the Persian Gulf or in a half dozen other places around the world if the country were fueled by solar power or hydrogen fuel cells. If the energy is limitless, the supply will always be secure.

Steve Kretzmann is campaigns coordinator with the Washington, D.C.-based Sustainable Energy and Environment Network.