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Oil has a bloody history. The ghost of petroleum hovers in the background even of wars that have liberty and democracy among their rationales. Blatant or veiled, the grab for oil resources has been a major factor behind many conflicts and military deployments. Oil has been deemed a strategic commodity. The word strategic has come to mean a product so vital to American society that government allegedly must step in, even to the point of war, to ensure adequate supplies and low prices. This book debunks the notion that U.S. military protection is required for oil imports and security and instead proposes solutions based on market-based provision of energy supplies, just as is the case for computers, food, and SUVs. War for oil has led to costly and unnecessary wars with massive losses of human life and the erosion of liberty at home and abroad.
No War for Oil enables educators, government officials, the media, and citizens to sort through the conventional claims about oil and the use of military power to secure it. Eland concludes that the use of U.S. military power to secure oil is not only unneeded and costly, but is counterproductive to U.S. security. Realizing that the alleged need to secure oil with military power is a canard, withdrawing U.S. forces from the Persian Gulf would enhance security, increase access to inexpensive energy resources, and help restore financial solvency for America.
1. Trading Blood for Oil
PART I / A HISTORY OF OIL AND THE USE OF MILITARY POWER TO CONTROL SUPPLIES
2. American Dominance in Oil
3. Iran, Iraq, World War I and the Interwar Years
4. World War II
5. The Cold War
6. Three Cartels: The Seven Sisters, the Texas Railroad Commission, and OPEC
7. Another Middle East War and Embargo, Shortages, and Price Rises
8. The Carter Doctrine
9. 1980s: European Dependence on Soviet Energy and the Iran-Iraq War
10. The US-Iraq Wars
11. The Oil Market Today
PART II / MYTHS ABOUT OIL AND ITS MARKET
12. Myth 1: No Viable Market Exists for Oil
13. Myth 2: Big Oil Colludes with OPEC to Stick Consumers With High Prices
14. Myth 3: Global Oil Production Has Peaked and the World Is Running Out of Oil
15. Myth 4: Oil Is a Special Product or Even Strategic
16. Myth 5: A Strategic Petroleum Reserve Is Needed in Case of Emergency
17. Myth 6: The U.S. Should Become Independent of Oil, Foreign Oil, or Overseas Energy
18. Myth 7: Oil Price Spikes Cause Economic Catastrophes
19. Myth 8: U.S. Policy Is to Maintain the Flow of Oil At the Lowest Possible Price
20. Myth 9: Possession of Oil Means Economic and Political Power
21. Myth 10: The United States Must Defend Autocratic Saudi Arabia because of Oil
22. Myth 11: Dependence of Europe on Russian Energy Is a Threat to U.S. Security
PART III / NO NEED TO USE MILITARY POWER TO SAFEGUARD FOREIGN OIL
23. Safeguarding Oil with Military Power Is Mercantilism and Imperialism
24. Threats To or From Oil
PART IV / Policy Prescriptions
About the Author
- The United States devotes more resources to the defense of oil in the Persian Gulf than most people realizea total of more than $334 billion per year (in 2009 dollars). To ensure the free flow of oil from the Middle East, the United States maintains military facilities in Oman, Bahrain, Qatar, Kuwait, the United Arab Emirates, and Iraqas well as in nearby Egypt, Djibouti, Turkey, Afghanistan, Pakistan, and Diego Garcia. Despite the large amount of U.S. expenditures to defend the Persian Gulf, the United States gets only about 18 percent of its imported oil from Saudi Arabia.
- Cheap foreign oil comes with huge hidden costs that American leaders and the public need to keep in mind when thinking about U.S. foreign policy. According to one estimate, gasoline would cost U.S. consumers $5 more per gallon if federal spending for the defense of Persian Gulf oil were incorporated into gas prices. The U.S. military subsidy for oil means lower prices at the gas pump, but consumers ultimately a pay a steep price for that fake discount (and more) in the form of higher taxes and inflationary deficit financing to help fund a large U.S. military presence abroad. The kings ransom that the United States spends to defend Persian Gulf oil is more than ten times the value of its annual imports from the Gulf.
- U.S. military protection of the Persian Gulf is unnecessary to ensure access to oil from that region. Without Uncle Sams generous help, Persian Gulf oil producers, shippers, and consumers (that latter residing mostly in Europe and East Asia) would have strong incentives to protect the free flow of oil. If the U.S. government eliminated its military subsidy for oil in the Persian Gulf, it could decommission approximately five army divisions, five active air wings of the Air Force, five Marine Expeditionary Brigades, and 144 ships, including six aircraft carriersroughly half of the U.S. armed forces.
- Because only 10 percent of the oil consumed by the United States comes from the Persian Gulf, U.S. military protection of that region is even more irrational than nineteenth century European imperialism. American taxpayers would enjoy significant savings if the United States were to rely exclusively on markets to obtain oil, just as Europeans became better off as their governments reduced their use of armed forces and protectionist trade policies and relied more on free markets to obtain goods from other countries. Unfortunately, the U.S. government has taken the opposite approach in recent years and has extended its security umbrella over oil-producing regions in West Africa, Latin America, the Caspian Sea region, and Central Asia.
- Several popular myths about oil undermine clear thinking about Americas energy needs and U.S. foreign policy. One long-standing myth is that oil possesses special or strategic characteristics. Yet, there are many critical products that the market is allowed to supply in abundance at efficient prices, and oil should be no different. Furthermore, more than enough oil is produced in the United States to meet the needs of the U.S. military in time of war, and this supply can be augmented with oil purchased from Canada and Mexico. Thus, oil is not strategic.
- Becoming energy independenta goal promoted by many Democratic and Republican politiciansis not in Americas best interest. In reality, consumers are better off when they are free to buy goods from companies and regions that have a comparative advantage in the production of those goods. Energy independence would serve only special interests such as less-efficient domestic oil suppliers or alternative energy producers that cant yet thrive without government subsidies or protection from foreign competition.
Oil has a bloody history. The ghost of petroleum often hovers in the background of military conflictseven of wars fought ostensibly to secure the blessings of liberty and democracy.
In No War for Oil: U.S. Dependency and the Middle East, foreign-policy analyst Ivan Eland (Senior Fellow, The Independent Institute) examines the troubled legacy of wars and military actions undertaken to secure access to oil, and reaches a conclusion profoundly at odds with the conventional thinking about oil and economic security: contrary to the beliefs shared by the architects of U.S. foreign policy for most of the past century, ensuring the free flow of oil to the United States does not require U.S. military protection of the worlds oil-rich regions. Markets alone can be relied upon to supply oil to Americans, just as markets are used to provide paying customers with food, industrial equipment, microprocessors, and other valued products.
Eland begins with a look at the fascinating history of the worlds most contested commodity. Oil, he shows, has rested under the surface of more military conflicts than most people realize. Eland then exposes the myths about oil that have mislead policymakers and the public into believing that the projection of military power abroad is essential to safeguard access to vital oil supplies. Rather than enhance U.S. national security and economic well being, the brandishing of U.S. military power in the Persian Gulf has undermined genuine American economic and political interests, he argues. In his concluding section, Eland distills the implications of his analysis for U.S. foreign policy and offers guidelines aimed at better serving the American people.
Readers of No War for Oil will come away with a solid understanding of the flaws in conventional thinkingunexamined nostrums shared by liberals and conservatives alikeabout oil security and the U.S. military presence in the Persian Gulf. Even readers who remain skeptical of Elands unorthodox but well-supported conclusions will better grasp the folly of taking at face value policymakers suggestions that the American people must be willing to go to war in the Middle East in order to maintain a high standard of living.
The choice is not whether to prepare to fight oil wars or to risk losing energy resources that power the American economythats a false alternative, Eland shows. Rather, the choice is whether or not to continue to devote increasingly costly resources to military and diplomatic policies that are both unnecessary and detrimental to the economic and political interests of the American people.
A History of Oil and Military Power
Part I chronicles the tribulations of one the most contested commodities in world historya tale that becomes one of international intrigue, not when the first oil well was struck near Titusville, Pennsylvania, in 1859, but after oil was discovered in Persia in 1908 and the Middle East soon became a chessboard for competing foreign powers.
When World War I and the Russian Revolution disrupted oil supplies in the Old World, governments scurried to find new sources of oilby then a commodity viewed as strategic in importancemuch to the neglect of rubber and other critical raw materials. Britain sought to expand its oil supplies from Iran, Iraq, and Kuwait; France from Kuwait; the United States from the Persian Gulf; and Japan from the Dutch East Indies.
During World War I, the United States supplied up to 80 percent of the allies petroleum, but a high wartime demand, coupled with price controls, led to oil shortages and fears of imminent depletion of world supplies.
Oil played a role in the prelude to World War II. The debate in Japan over whether to go to war with the United States centered on the longer-term availability of oil for the Japanese military, which the United States was trying to cut off in response to Japans invasion of China. Like Imperial Japan, Nazi Germany sought to conquer oil lands rather than purchase petroleum on the open market. Securing oil supplies became a top wartime goal of all countries involved in the conflictagain, often to the neglect of other vital raw materials.
In 1945, President Roosevelt reached an agreement with King Abdul Aziz of Saudi Arabia of lasting significance: the kingdom would give the United States access to oil in exchange for military assistance. Shapers of postwar U.S. foreign policy argued that the United States should import more foreign oil rather than use domestic supplies that would be relied upon if war broke out again. The Soviets delay in leaving Iran in 1946 added to cold-war tensions and gave a sense of urgency to the military protection of foreign oil supplies.
Eland shows that U.S. foreign policy in the postwar era had profound impact on subsequent events. The 1973 oil crisis, the Iranian Revolution in 1979, the Carter Doctrine, European dependence on Soviet energy, the Iran-Iraq War, and the U.S.-Iraq Warsall were shaped by long-held assumptions that formed in the early decades of the twentieth century. Many of those assumptions, however, were wrong.
Myths about Oil Markets
In Part II, Eland identifies and rebuts eleven influential myths about the market for oil. Some myths reflect the belief that various government subsidies and OPEC policies prevent oil markets from operating effectively. Although plausible, this viewpoint vastly underestimates the power of the profit motive to guide the production and distribution of oil. It also ignores numerous Federal Trade Commission investigations that have failed to prove collusion among domestic oil companies.
Other myths result from a failure toexamine the best available evidence. For example, credible evidence indicates that the worlds oil reserves are growing. The Strategic Petroleum Reserve, an unnecessary relic of the Cold War mindset, is another example of a program based on something other than a close examination of the evidence.
One misconception easily refuted is the idea that a country must possess special access to oil in order to advance economically. Postwar Japan and Europe (especially Germany), and more recently the Asian Tigers, decisively refute this belief. Unfortunately, Americas oil-related obsessions with Saudi Arabia and Russia indicate the pervasiveness and sway of this myth and others.
Safeguarding Oil with Military Power
Is military power necessary for securing access to oil? Part III examines the belief that the free flow of oil from the Persian Gulf warrants protection from the U.S. military.
Two dubious assumptions underlie the military necessity doctrine, according to Eland. The first is that oil is of special strategic importance to the U.S. economy. In reality, oil is no more vital than many other goods and services that we rely exclusive on markets to provide.
The second is that a spike in oil prices or a disruption of oil supplies during a crisis would pose a grave threat to the U.S. economy. Eland, however, argues that the global oil market would quickly alleviate major supply disruptions, even those resulting from targeted economic embargoes: markets would see to it that the supply disruptions were dissipated around the world, resulting merely in higher prices, not mass shortages.
Eland also addresses other oil-related U.S. national security concerns. These include worries that U.S. dependence on foreign oil necessarily leads to unsavory alliances and undermines democracy abroad; anxieties that unfriendly petro-states use oil revenues to fund anti-U.S. terrorism; and fears that a scarcity of oil will lead to more conflicts. Most scenarios that would depict a threat derived from foreign oil evaporate under close scrutiny.
Eland concludes this section by examining scenarios involving threats to oil. These include what if questions such as the conquest of oil reserves by an unfriendly powerful nation; reductions in oil supplies from war, internal upheaval, or unfriendly suppliers; political instability in oil-rich regions, especially the Persian Gulf; future production cutbacks or oil embargos by the oil cartel; Iranian blockage of the Straits of Hormuz; and Chinas newfound interest in gaining oil supplies for its burgeoning economy. Under each scenario, Eland argues, U.S. military protection of oil undermines American economic interests.
Having debunked many myths about oil markets and corrected misperceptions about U.S. national security, Eland concludes No War for Oil by offering broad guidelines for U.S. policymakers. Among those principles are the following:
- Allow markets to meet the energy needs of the United States.
- Rely on markets to provide oil even during a crisis.
- Hasten the withdrawal of the U.S. military from the Persian Gulf (and from other predominantly Muslim lands) in order to reduce hostility toward the United States.
- At minimum, encourage other countries to share the burden of safeguarding the flow of oil from the Persian Gulf.
Reducing or eliminating the U.S. military presence in the Persian Gulf could provide relief for American taxpayers at a time when the economic burdens of empire are increasingly apparent. More importantly, military retrenchment could save American lives by avoiding unnecessary military outputs and campaigns and thereby dissipate the emotional fuel that the al-Qaeda terrorist network has used to garner support from radicalized Muslim populations.
In short, going to war for oil is unnecessary, expensive in blood and treasure, and dangerous for U.S. security, Eland concludes.
No War for Oil is a tour de force of history, myth-busting, and sturdy policy analysis. It is at once an excellent overview of the development and quirks of the world oil market, a slaying of eleven monstrous but widely believed falsehoods, and a description of how and why our wars for "energy independence" have had quite the opposite effect. At a time when ill-conceived, unwinnable foreign wars are driving runaway deficits, we need more than a mild course correction. We need the facts, the truth, and the analysis to question the foundational assumptions that have driven American foreign policy for the past 60 years. This book could not be more valuable or more timely.
Michael C. Munger, Professor of Political Science, Public Policy and Economics, Duke University
Ivan Eland provides a clear and powerful analysis of a major driver of U.S. foreign policy and military strategy. He offers a fascinating history of oil and its beguiling allure. For anyone with a serious interest in American defense and foreign policies, the Middle East, or the perilous pursuit of 'strategic goods,' the splendid book No War for Oil is a must read.
Donald L. Losman, Professor of Economics, Industrial College of the Armed Forces, National Defense University
Here at long last is a book that explodes all of the myths underlying the use of military force to protect the global flow of oil. No War for Oil not only provides an invaluable account of the misguided policies that have led to ever-increasing U.S. military involvement in the Middle East, but also shows how the de-militarization of U.S. energy policy would better serve the nation's long-term interests.
Michael T. Klare, Professor of Peace and World Security Studies, Hampshire College
In No War for Oil, Ivan Eland shows that U.S. dependence on oil is no big deal; that thinking otherwise has led to huge costs, including at least one war; that we are not running out of oil; that a free market in oil is the best energy policy; and that oil is incredibly cheap compared to the alternatives. Eland beautifully weaves history and economics to tell a compelling and, more important, true story. He has hit a home run.
David R. Henderson, Research Fellow with the Hoover Institution, Associate Professor of Economics at the Naval Postgraduate School, and former Senior Economist for Energy Policy with the Presidents Council of Economic Advisers
Ivan Eland, a Senior Fellow and Director of the Center on Peace & Liberty at the Independent Institute, believes that oil isn't strategic at all. In this well-written and provocative new work of advocacy, he argues that there are ways for the U.S. to gain access to petroleum while maintaining the nation's safety and security. The trick is for governments to just allow the market to deliver oil and recognize the fact that despite politicians' promises, oil independence is unachievable and even undesirable.. . . No War for Oil critically reviews the history of various flawed efforts by the U.S. to develop unholy partnerships with different foreign governments to acquire and secure access to oil, from World War I to the present. . . . Rather than using oil as a strategic commodity and causing international conflict, Eland's solution is for the U.S. to use the free-market economy to its advantage. . . . Withdrawing troops from the Islamic world and the Persian Gulf would show that the White House is serious in its intent to create a more peaceful political and economic environment. At the very least, Eland suggests, it would be a good start if they can go halfway.
In No War for Oil, Eland provides a catalog of sharply argued rebuttals of the many myths that pervade Americans understanding of oil and national security. His comprehensive, methodical presentation will be very useful for reorienting the policy debate to firm, analytical ground. Not everyone will agree with every point Eland raises, but he is setting the right ground for crucial foreign policy debates. And the clear preponderance of evidence and analysis in the book convincingly presents the case for substantial changes in American foreign policy.
Eugene Gholz, Professor, Lyndon B. Johnson School of Public Affairs, University of Texas
Ivan Eland has produced a devastating indictment of the oil rationale for the intrusive, counterproductive U.S. military presence in the Middle East. No War for Oil should help debunk the most prominent justification for that misguided policy. Eland shows that on this issue, as on so many others, allowing the free market to operate is both less expensive and less disruptive. Abandoning the attempt to police the Muslim world in the name of preserving Western access to oil will end the terrible price that the American people have paid in blood as well as treasure.
Ted Galen Carpenter, Senior Fellow, Cato Institute
Would there really be little damage to the world economy if Saudi Arabia were lost to radicals intent on destroying it? The author rightly argues that the reckless U.S. military buildup in the Arab Gulf countries since 1987 may hasten that day. He is well worth reading . . . . Recommended.
Much blood has been shed in conflicts over oil, but Independent Institute scholar Ivan Eland shows in No War for Oil that we would have saved many lost lives and squandered resources if we had simply allowed the market to work. There is no more need to fight over oil than over iron ore or coffee plantations. This is a myth-busting book that directly challenges many mistaken ideas that keep leading America into terrible policy blunders. Combining historical analysis with a sound grasp of economics, Eland presents an overwhelming case in favor of a noninterventionist energy policy. . . . In short, Eland shows, it is much cheaper to buy oil on the market than to fight for it. Just as its foolish to fight for oil, it is similarly foolish to strive for energy independence. Eland attacks the idea that foreign oil is something we must avoid buying and that therefore we need to subsidize all sorts of inefficient alternatives like biofuels, solar power, and wind power. The big message of No War for Oil is impossible to miss. The ideal energy policy is to leave things aloneno intervention internationally, no subsidies domestically.
- Gold Medal Winner in Current Events (Foreign Affairs/Military)