G
Guest
·U.S. policy in the Middle East is driven by baseless fears that an "oil
weapon" can cut off our fuel supply, a Johns Hopkins researcher has
concluded.
In a peer-reviewed journal article, Roger J. Stern argues that the
decades-old belief that petroleum-rich Persian Gulf nations must be
appeased to keep oil flowing is imaginary, and the threat of deployment
of an "oil weapon" is toothless. His review of economic and historical
data also shows that untapped oil supplies are abundant, not scarce.
Stern's analysis, titled "Oil market power and United States national
security," appears in the Jan. 16-20 online Early Edition of
Proceedings of the National Academy of Sciences. In the article Stern
argues that the longstanding U.S. security concern that our oil supply
could be threatened is wrong.
The real security problem, says Stern, comes from market power. Persian
Gulf oil producers, he says, collude to command artificially high
prices that could never exist in a competitive market. Excessive OPEC
profits result, he says. These contribute to instability in the region,
terror funding and the likelihood that a Persian Gulf superpower could
emerge if one state captured the oil production of its neighbors.
Because of these threats, the United States has concluded it must use
military force to block state-on-state aggression in the region and to
contain terrorism.
"U.S. appeasement of the oil market power not only helps create these
problems, it makes them inevitable," said Stern, a doctoral student in
the Department of Geography and Environmental Engineering. "Why do we
follow this schizophrenic policy? We do it because we believe the 'oil
weapon' might be used to reduce our supply if we somehow offend the
OPEC countries. My research shows the oil weapon is completely
implausible." According to the journal article, recent history shows
that attempts to use an oil weapon have consistently failed. The idea,
Stern says, dates back to the mid-1930s, when the League of Nations
considered cutting off oil to Italy as punishment for its aggression in
Ethiopia. The league realized the oil weapon couldn't work, however,
because non-league nations could continue to supply Italy. Keeping oil
out of Italy would have required a blockade, an idea dismissed as
impossible to enforce. What was true for Italy then is true for the
United States today, Stern says.
By the 1950s, Stern says, the low price of Persian Gulf oil imports
jeopardized the profits of smaller U.S. oil producers. To restore
shrinking market share, the U.S. oil industry successfully lobbied
Congress to limit imports, arguing that reliance on foreign oil would
undermine national security. U.S. producers argued that low-priced,
abundant imports were dangerous because they might someday be withheld.
"The oil weapon of U.S. politics descends from this confection," Stern
writes in his article.
In the early 1970s, fear of the oil weapon moved to center stage once
again. An influential article in Foreign Affairs predicted fuel
shortages and economic disaster if the United States did not honor
Middle East oil producers' wish that Israel's borders be redrawn. The
United States defied this wish, and in 1973 Persian Gulf states
unleashed the oil weapon in response. They vowed to cut supplies to the
United States if Israel did not return to its 1967 borders. But because
the United States could obtain fuel from elsewhere, Stern argues, and
because the Persian Gulf nations were dependent on oil revenue, their
"attack" was quickly abandoned. Panic buying kept prices high for a
while, but actual supply fell only a small amount. Still, fear of a
fuel cut-off remained. "Diplomats misread the market," Stern writes.
"The oil weapon is impotent, but belief in it is not."
Stern's hypothesis is that "threats do arise in the oil market, but not
from the oil weapon but from the (OPEC) cartel's management of
abundance." Stern said his research shows that since 1970 the cost of
extracting oil in Saudi Arabia has dropped by more than one-half, a
clear sign of abundance. He argues that Persian Gulf oil prices are
being kept artificially high in order to generate monopoly profits for
these nations.
"Because of oil's enormous returns, Gulf states try to seize control of
each others' fields," Stern says. "Iraq invaded Iran and Kuwait for
this purpose. Our military is there today trying to keep regional peace
and prevent a new superpower. Yet this policy allows aggressive oil
states like Iran to grow ever-richer and more dangerous from the
product they sell to us."
U.S. leaders, Stern says, must stop allowing fear of the oil weapon to
dictate foreign policy. Instead, he says, they must find ways to reduce
our fuel demand. "It's like we're holding a gun to our own heads: Our
belief in the oil weapon constrains our concept of what we can and
cannot do in the Middle East and in our own economy," he says. "It also
blinds us to the huge opportunity to make ourselves more secure by
reducing our oil consumption."
John J. Boland, an expert on utility economics and environmental policy
who serves as Stern's faculty advisor, said the journal paper, part of
Stern's doctoral thesis, raises important issues. "It's a pretty
significant article," he said. "One thing Roger does is attack the
perception that petroleum is scarce. That's a very unpopular position,
one that is aggressively disputed by our government, even though other
analysts have also raised this idea."
Added Boland, who is a professor emeritus in the Department of
Geography and Environmental Engineering at Johns Hopkins: "This paper
presents an unpopular perspective that has profound implications for
our nation's energy policy and foreign policy."
Source: Johns Hopkins University
weapon" can cut off our fuel supply, a Johns Hopkins researcher has
concluded.
In a peer-reviewed journal article, Roger J. Stern argues that the
decades-old belief that petroleum-rich Persian Gulf nations must be
appeased to keep oil flowing is imaginary, and the threat of deployment
of an "oil weapon" is toothless. His review of economic and historical
data also shows that untapped oil supplies are abundant, not scarce.
Stern's analysis, titled "Oil market power and United States national
security," appears in the Jan. 16-20 online Early Edition of
Proceedings of the National Academy of Sciences. In the article Stern
argues that the longstanding U.S. security concern that our oil supply
could be threatened is wrong.
The real security problem, says Stern, comes from market power. Persian
Gulf oil producers, he says, collude to command artificially high
prices that could never exist in a competitive market. Excessive OPEC
profits result, he says. These contribute to instability in the region,
terror funding and the likelihood that a Persian Gulf superpower could
emerge if one state captured the oil production of its neighbors.
Because of these threats, the United States has concluded it must use
military force to block state-on-state aggression in the region and to
contain terrorism.
"U.S. appeasement of the oil market power not only helps create these
problems, it makes them inevitable," said Stern, a doctoral student in
the Department of Geography and Environmental Engineering. "Why do we
follow this schizophrenic policy? We do it because we believe the 'oil
weapon' might be used to reduce our supply if we somehow offend the
OPEC countries. My research shows the oil weapon is completely
implausible." According to the journal article, recent history shows
that attempts to use an oil weapon have consistently failed. The idea,
Stern says, dates back to the mid-1930s, when the League of Nations
considered cutting off oil to Italy as punishment for its aggression in
Ethiopia. The league realized the oil weapon couldn't work, however,
because non-league nations could continue to supply Italy. Keeping oil
out of Italy would have required a blockade, an idea dismissed as
impossible to enforce. What was true for Italy then is true for the
United States today, Stern says.
By the 1950s, Stern says, the low price of Persian Gulf oil imports
jeopardized the profits of smaller U.S. oil producers. To restore
shrinking market share, the U.S. oil industry successfully lobbied
Congress to limit imports, arguing that reliance on foreign oil would
undermine national security. U.S. producers argued that low-priced,
abundant imports were dangerous because they might someday be withheld.
"The oil weapon of U.S. politics descends from this confection," Stern
writes in his article.
In the early 1970s, fear of the oil weapon moved to center stage once
again. An influential article in Foreign Affairs predicted fuel
shortages and economic disaster if the United States did not honor
Middle East oil producers' wish that Israel's borders be redrawn. The
United States defied this wish, and in 1973 Persian Gulf states
unleashed the oil weapon in response. They vowed to cut supplies to the
United States if Israel did not return to its 1967 borders. But because
the United States could obtain fuel from elsewhere, Stern argues, and
because the Persian Gulf nations were dependent on oil revenue, their
"attack" was quickly abandoned. Panic buying kept prices high for a
while, but actual supply fell only a small amount. Still, fear of a
fuel cut-off remained. "Diplomats misread the market," Stern writes.
"The oil weapon is impotent, but belief in it is not."
Stern's hypothesis is that "threats do arise in the oil market, but not
from the oil weapon but from the (OPEC) cartel's management of
abundance." Stern said his research shows that since 1970 the cost of
extracting oil in Saudi Arabia has dropped by more than one-half, a
clear sign of abundance. He argues that Persian Gulf oil prices are
being kept artificially high in order to generate monopoly profits for
these nations.
"Because of oil's enormous returns, Gulf states try to seize control of
each others' fields," Stern says. "Iraq invaded Iran and Kuwait for
this purpose. Our military is there today trying to keep regional peace
and prevent a new superpower. Yet this policy allows aggressive oil
states like Iran to grow ever-richer and more dangerous from the
product they sell to us."
U.S. leaders, Stern says, must stop allowing fear of the oil weapon to
dictate foreign policy. Instead, he says, they must find ways to reduce
our fuel demand. "It's like we're holding a gun to our own heads: Our
belief in the oil weapon constrains our concept of what we can and
cannot do in the Middle East and in our own economy," he says. "It also
blinds us to the huge opportunity to make ourselves more secure by
reducing our oil consumption."
John J. Boland, an expert on utility economics and environmental policy
who serves as Stern's faculty advisor, said the journal paper, part of
Stern's doctoral thesis, raises important issues. "It's a pretty
significant article," he said. "One thing Roger does is attack the
perception that petroleum is scarce. That's a very unpopular position,
one that is aggressively disputed by our government, even though other
analysts have also raised this idea."
Added Boland, who is a professor emeritus in the Department of
Geography and Environmental Engineering at Johns Hopkins: "This paper
presents an unpopular perspective that has profound implications for
our nation's energy policy and foreign policy."
Source: Johns Hopkins University
