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.
His 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
long-standing U.S. security concern that our oil supply
could be threatened is wrong.
Stern, a doctoral student in the Whiting School's
Department of
Geography and Environmental Engineering, says that the
real security problem 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 oil market power not only helps
create these problems, it makes them inevitable," Stern
says. "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 cutoff 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, 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 the price of oil is kept
artificially high by investment restraint by Persian Gulf
countries. This is what generates monopoly profits.
"Because of oil's enormous returns, Gulf states try to
seize control of each other's 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 adviser,
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 DOGEE,
"This paper presents an unpopular perspective that has
profound implications for our nation's energy policy and
foreign policy."
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