Oil is the lifeblood of industrial economies. Klare notes that “from 1860 until World War II, [the United States] was the world’s leading oil producer, easily supplying its own needs and often generating a surplus for export…During World War II, for example, the United States was able to extract enough oil from domestic fields to satisfy the massive requirements of its own forces and those of its major allies.” However, after the war, the United States began importing far greater quantities of oil, a trend that has continued unabated (Klare, 2004, pp. 9-10).
It has been recognized for at least one hundred years that global oil demand would outstrip and ultimately exhaust supply. The imperial powers have acted to control diminishing reserves. Chomsky (1996, p. 192) observes that:
The United States did not need Middle East oil for itself. Rather, the goal was to ensure that the enormous profits from the energy system flow primarily to the United States, its British client, and their energy corporations, not to the people of the region, and that oil prices stay within the range most beneficial to the corporate economy, neither too high nor too low.
American power could also be exerted by restricting Soviet access and controlling the tap for potential rivals like Japan that did not have America’s wealth of natural energy resources (Mercille, 2011, pp. 331-332). We will see in later sections that this conception of global affairs can explain American actions with respect to the Iraqi economy.
Current domestic production can no longer feasibly satisfy American consumption. The United States economy and its reliance on oil has mushroomed to an extent that full reliance on domestic production for current oil uses would deplete all known American oil reserves in just four years (Figure 5). If oil is to stay a bulwark of the American economy, the United States, with 1.6% of proven worldwide oil reserves, must look elsewhere (Klare, 2004, pp. 17-19). As Dick Cheney put it when he was president of Halliburton (Baker, Ismael, & Ismael, 2010, p. 18):
By 2010 we will need on the order of an additional 50 million barrels a day. So where is the oil going to come from? Governments and the national oil companies are obviously controlling about ninety percent of the assets. Oil remains fundamentally a government business. While many regions of the world offer great oil opportunities, the Middle East with two-third of the world’s oil and the lowest cost is still where the prize ultimately lies.
Juhasz argues “one needs only a map showing Big Oil’s overseas operations, the world’s remaining oil reserves, and the oil transport routes to track the realignment and predict future deployments of the US military.” For example, since 2001 the United States has built new military bases in Iraq, Kuwait, Qatar, Turkey, Afghanistan, Kyrgyzstan, Uzbekistan, Tajikistan and Pakistan (2008, p. 321).
Along with the United States in general, Western oil corporations also need to find additional sources of reserves. Juhasz (2008, p. 320) reports that “within ten to fifteen years, the major oil companies will have depleted their own reserves unless major changes occur. The Federal Trade Commission estimated in 2004 that ExxonMobil and ConocoPhillips would most likely run out of oil in 2017, Chevron in 2016, and Shell and BP in 2015.”
There are two methods by which the United States government and its corporations control Middle Eastern oil: it is bought or stolen. The historical Saudi-American alliance is the preeminent example of the former. The Western-Saudi dependency was initiated by the British in the years preceding World War I and assumed by the Americans as the sun set on the British Empire. Though oil was not discovered in Saudi Arabia until 1938, imperial interest began in earnest as exploration in other Middle Eastern countries yielded large wells (Yergin, 2011, p. 286). In 1933, Standard Oil of California garnered a sixty-year lease on what was then an unknown quantity of Saudi Arabian oil, signaling the increasing clout of American power in the region. The first presidential action concerning Saudi Arabia was the 1943 extension by Roosevelt to of lucrative Lend-Lease aid to the kingdom. Substantial military and other aid began to flow to Saudi Arabia and has continued unabated, since supplemented by high-tech weapons sales (Klare, 2004, pp. 26-55).
One should not pretend this relationship was based on altruism. Unlike Iraq, which previously got its weapons from Soviet bloc exporters, much of the oil money in Saudi Arabia is recycled to American defense contractors (Halperin, 2011, p. 210). Comparisons by Zalloum (2007, pp. 21-22) illustrate the effects of a century of exploitation:
"The combined revenue of all OPEC countries from oil in 2003 was about $240 billion, less than the revenue of Wal-Mart for the same year. The total assets of the 480 Arab financial institutions and banks of all the Arab countries, including the oil-producing states, in 2004 amounted to $780 billion, less than two-thirds of the assets of just one American bank, Citigroup. Most of the petrodollars were recycled back to Western banks and American Treasury bills."
In a broader cost-benefit formulation of finances before the Iraq War, “maintaining access to Persian Gulf oil requires about $50 billion of the annual US defense budget, including maintenance of one or more carrier task forces there, protecting sea lanes, and keeping large air forces in readiness in the area. But the oil we import from the Persian Gulf costs only a fifth that amount, about $11 billion per annum” (Johnson, 2000, p. 87). The World Bank gave more than $5 billion in subsidies to the global oil industry since 1992 (Juhasz, 2008, p. 392). Such oil imperialism is the modus operandi for the ‘agreements’ foisted on Iraq by force (see “Contracts at Gunpoint”).
Baker, Raymond, Shereen Ismael and Tareq Ismael (ed.). 2010. Cultural Cleansing in Iraq: Why Museums Were Looted, Libraries Burned and Academics Murdered. Pluto Press.
Chomsky, Noam. 1996. World Orders Old and New. Columbia University Press.
Halperin, Sandra. 2011. “The Political Economy of Anglo-American War: The Case of Iraq.” International Politics 48(2/3), pp. 207-228.
Johnson, Chalmers. 2000. Blowback: The Costs and Consequences of American Empire. Metropolitan Books.
Juhasz, Antonia. 2008. The Tyranny of Oil: The World’s Most Powerful Industry – and What We Must Do to Stop It. Harper.
Klare, Michael. 2004. Blood and Oil: The Dangers and Consequences of America’s Growing Dependency on Imported Petroleum. Holt Books.
Mercille, Julien. 2010. “The Radical Geopolitics of US Foreign Policy: The 2003 Iraq War.” GeoJournal 75, pp. 327-337.
Yergin, Daniel. 2011. The Quest: Energy, Security, and the Remaking of the Modern World. Penguin Press.
Zalloum, Abdulhay Yahya. 2007. Oil Crusades: American through Arab Eyes. Pluto Press.