Search

Begin New Search Topic Oil Journal Journal of International Affairs

1. Misperceiving U.S. Foreign Policy in the Gulf: Raising the Hidden Costs of U.S. Dependence on Oil

Author:
Steve A. Yetiv
Publication Date:
01-2016
Content Type:
Journal Article
Journal:
Journal of International Affairs
Institution:
School of International and Public Affairs, Columbia University
Abstract:
United States foreign policy in the Middle East over the last few decades has been controversial and checkered, and Washington has certainly flexed its muscles in the region. However, the question arises as to how aggressive America has been with regard to oil in the region. I distinguish between two perspectives in how America is viewed, which we can simply call the offensive and defensive perspectives, recognizing that there is a continuum of views. From the offensive perspective, America is viewed as having one or more of these goals: steal or own Middle East oil; control Middle East oil in order to undermine Muslims; dominate Middle East oil to advance global hegemony; or exercise “puppet” control over oil producers like Saudi Arabia to coerce them into charging far lower oil prices than markets would warrant.1 By contrast, from the defensive perspective, America chiefly aims to prevent others from threatening oil supplies in a manner that would spike global oil prices and possibly cause a recession or depression. Muslim opinion polls have revealed that oil issues are a broader source of tension in relations between elements of the Muslim world and the West. The U.S. role in oil-related issues feeds into historical, political, and religious perspectives of an imperialist and power-hungry America. In fact, a not uncommon view in the Middle East is that America seeks to exploit, even steal the region’s oil resources, a viewpoint much in line with the offensive perspective described above. I argue that the history of America’s role in the region suggests that this is largely a misconception, and that this misconception is not immaterial. It seriously raises the cost of the use of oil and of American regional intervention. This misconception not only stokes terrorism and anti-Americanism, but also complicates America’s relations with Middle Eastern countries, affects its image among Muslims, and hurts its global leverage insofar as such views become internationally prominent. Indeed, it is almost a maxim in many capitals in the Middle East that close cooperation with Washington carries a domestic political cost. Recall, for example, that the Saudis were initially reluctant to host American forces after Iraq invaded Kuwait on August 2, 1990, even though they felt seriously threatened by Saddam Hussein.
Topic:
Foreign Policy, Energy Policy, Oil, and Military Strategy
Political Geography:
United States, Middle East, North America, and Persian Gulf

2. War and the Oil Price Cycle

Author:
Amy Myers and Jaffe Jareer Elass
Publication Date:
01-2016
Content Type:
Journal Article
Journal:
Journal of International Affairs
Institution:
School of International and Public Affairs, Columbia University
Abstract:
Oil has shaped international conflict for decades. According to one estimate, twenty-five to fifty percent of interstate wars between 1973 and 2012 had oil-related linkages. 1 But the cyclical nature of oil’s contribution to global conflict is not well understood. Not only are oil prices cyclical, but the geopolitics of oil are linked inexorably to the same boom and bust price cycle. Military adventurism, proxy wars and regional pathologies in the Middle East expand and contract with the ebb and flow of massive petrodollar accumulations related to the oil price cycle. The massive inflow of petrodollar revenues when oil prices are high creates disposable incomes that can be easily dispensed on regional arms races, especially since oil consuming countries like the United States are incentivized to increase arms sales as a means of solving oil import related trade deficits. Besides transferring wealth from industrialized countries to oil producers in the Middle East and North African (MENA) region and Russia (and stimulating renewed drilling for oil and gas in North America), high global oil and natural gas prices also slow global economic growth and encourage energy conservation. This causes petroleum demand to slow globally, lowering oil prices. Social and political problems in the region reemerge as oil prices recede. Regional governments have fewer resources to spend on restive populations that have become accustomed to generous handouts enabled by high oil prices. Job creation and visible social programs slow, dissatisfaction rises, and the consequences of economic downturns incite support for militants. Ensuing instability forces governments to use newly purchased arms, which ironically begins the cycle yet again, as new conflicts disrupt oil supplies. In this manner, the world experiences perpetuating patterns of military conflict, followed by oil supply crises, and accompanying global financial instability. In effect, the Middle East resource curse has become globalized. The challenges this is presenting on humanitarian, security and economic fronts have become increasingly dangerous. The arms race that has accompanied the rise of oil prices over the 2000s has been no exception and is now all the more complicated due to the violent participation of sub-national radicalized groups that are less susceptible to diplomatic pressures or initiatives. In this emerging geopolitical context, the rise of violent subnational groups like ISIS and Al-Qaeda are increasingly putting oil infrastructure at risk, laying the groundwork for a future oil crisis that may prove harder to solve than in the past. As borders and ruling institutions have become contested, so has control of the region’s major oil and gas facilities. Initially an outgrowth of disunity inside Iraq, the conflict over oil and gas facilities is now accelerating across ungoverned territories, with important long-term consequences for global energy markets. Mideast oil and gas production capacity, along with surface facilities, are increasingly being damaged in ways that will make them hard to repair. Export disruptions, which were once sporadic, are becoming a more permanent feature of the civil war landscape. The level of destroyed capacity is currently estimated at about 2 million b/d and rising.2 The longer Mideast conflicts fester, the more that infrastructure could become at risk. There is an additional element to this oil and war story that links structurally with the oil boom and bust cycle. As oil prices recede, along with a decreased demand for oil and accelerating regional conflict, wealthy oil producers such as Saudi Arabia, the United Arab Emirates, and Kuwait, are often tempted to use large oil production capacity as a strategic asset. They flood the market with increased supplies in order to lower prices, thereby hurting geopolitical rivals. This price war strategy, which was notably present during the prolonged Soviet war in Afghanistan and the eight year Iran-Iraq War, temporarily ameliorates the short run effects of war on surface export facilities through excessive production rates. In addition, it lays the seeds for the future uptick in the oil market, by discouraging investment in future oil productive capacity outside the Middle East when prices are extremely low. In the case of the 2000s, the destruction caused by ISIS on the oil sector in many locations around the Middle East, combined with expected losses in investment in other parts of the world (like Canada’s oil sands and the Arctic due to current low oil prices), may be creating the conditions for a future oil supply crunch. This has major implications on U.S. policy. This article asserts that the United State would be, in light of these circumstances in the Middle East, unwise to dismantle its Strategic Petroleum Reserve (SPR) as has been suggested on Capitol Hill. It would be similarly unwise for the United States to lose focus on the importance of conservation efforts in the transportation sector which has both national security and climate benefits. The United States would benefit strategically from a reevaluation of its ban on oil exports. Finally, the United States should place a greater emphasis on conflict resolution in troubled states. By resolving internal conflicts over the distribution of oil revenues, the United States can better pave the way for long-term solutions whereby those same revenues can be integrated into national budgets in ways that brings economic prosperity to populations instead of rising military expenditure.
Topic:
Energy Policy, Oil, Military Strategy, Gas, and Conflict
Political Geography:
United States, Middle East, North America, and Persian Gulf

3. China and India: More Cooperation than competition in Energy and Climate Change

Author:
Tofiq Siddiqi
Publication Date:
05-2011
Content Type:
Journal Article
Journal:
Journal of International Affairs
Institution:
School of International and Public Affairs, Columbia University
Abstract:
Energy and climate change are two important areas in which there is much more cooperation than competition between China and India. After a few years of trying to outbid each other for oil and gas exploration and production licenses, both have found it more productive to bid jointly for many such contracts. Even though neither China nor India has agreed to limits on their emissions of greenhouse gases, both are committed to reducing the carbon intensity of their development, by 40 to 45 percent from 2005 levels by 2020 for China, and 20 to 25 percent over the same time period for India. To achieve these goals, the two countries have launched major programs to install power plants using renewable energy sources and nuclear energy, and to increase the efficiency of energy use. It is unlikely that either China or India will agree to absolute reductions in greenhouse gas emissions from their present levels soon, but they may be willing to cap them at future levels that still permit their future per capita income to become comparable to that of countries in Western Europe. At the recently concluded United Nations Climate Change Conference in Cancun, China was strongly supportive of a continuation of the Kyoto Protocol for a second commitment period, but India indicated that it may be willing to explore other approaches suggested by the United States, the EU and small island nations. Though their paths to addressing climate change may begin to differ, it is highly likely that China and India will continue to share the same strategic goal of achieving parity with the West in terms of standard of living of their populations, even if it means higher emissions for another decade or two.
Topic:
Climate Change and Oil
Political Geography:
China, India, and Western Europe

4. Africa: The United States and China Court the Continent

Author:
David H. Shinn
Publication Date:
06-2009
Content Type:
Journal Article
Journal:
Journal of International Affairs
Institution:
School of International and Public Affairs, Columbia University
Abstract:
The United States and China are the two most important bilateral, external actors in Africa today. While the United States wields more influence in most of Africa's fifty-three countries, China has surpassed it in a number of states and is challenging it in others. Both countries look to Africa as an increasingly significant source of raw materials, especially oil. China, more than the United States, views Africa from a long-term strategic perspective. Both countries seek political and economic support in international forums from African countries, which constitute more than a quarter of the membership of the United Nations. The interests of the United States and China in Africa are more similar than dissimilar. There will inevitably be some competition over access to African natural resources and political support, but there are even greater opportunities for cooperation that can benefit African nations.
Topic:
Oil and Political Economy
Political Geography:
Africa, United States, and China