PETROANALYSIS || ARTICLE
Low Oil Prices: A Threat to US Strategic Vision
When it comes to Great Powers and oil, for some reason the first case that comes to my mind is that of Great Britain. Perhaps for the following reasons:
It had none of its own but nevertheless established a strategy for the control over foreign oil in the Eastern Hemisphere where it had successfully exercised Imperial power for centuries. It even went beyond that geographical limit as the Queen of Seas acquired important positions in the American continent.
With time other Super Powers emerged namely with regard to oil: the US and the USSR…and history tells that GB had been opposed to both although in different ways.
The present sudden and sharp slump in oil prices is perhaps good news for oil importing nations and consumers as individuals. But for countries whose economies depend on oil revenues, it is a different story. And it seems that no country on its own or a set of countries together has the means to reach a settlement before prices reach a single digit.
Thus, right now, common wisdom everywhere reminds people with some kind of knowledge on politics that one should look at Washington as well as Moscow for a solution… the oil Super Powers.
And here it is necessary to go back to the time when today’s American consciousness and ideology on oil was formed.
It is rooted in that nation’s collective memory of the great Depression. The happy years that followed… and the traumatic effects of Pearl Harbor, the war in the Pacific.
It was at that time that oil became a question of National Interest and the industry at home acquired additional recognition and symbolism. Its wellbeing has ever since been considered as vital to the Nation’s. Not so the big ones. Trusts and monopoly against which the Sherman Act already in 1890 had been issued. After all, it is the country of the ” Law of Capture “. Common mentality seems to be opposed to the notion of state interference.
Its wellbeing has ever since been considered as vital to the Nation. Not so the big ones…
At that point, independent producers mainly in Texas were pessimistic about their ability to discover as much new oil reserves as the war effort was demanding. America might become dependent upon imported crudes …and that was unthinkable for the nation where the oil industry was born.
But they were right. Consumption after WWII continued to grow not only in the US but now also in Europe at such high rates that the patriotic sector of the American petroleum industry could not withstand.
The “Cartel ” received yet more attention from different branches of the Administration. It needed protection abroad and had to be encouraged to displace rivals where peaceful admittance was denied…as the case of Iran and Britain’s insistence to hold its monopoly there.
It had been ever since a difficult balancing act for all the occupants of the White House. Independent producers of Texas had to use pro rationing until as late as 1972 as OPEC was not receptive, until 1982, to the idea originally proposed by Venezuela which was also left with modest oil reserves…
Recycling petrodollars salvaged the US dollar from further deterioration (after Bretton Woods death in 1971). But first prices had to be significantly inflated and a scapegoat had to be given name: Arab Oil Embargo. Much easier than “The Bilderberg Group Meeting at Saltsjöbaden”, the Swedish island where Kissinger and the bankers worked the plan out.
Previous cases of oil glut and low oil prices crisis had ever since ended by some kind of diplomatic intervention by the US government.
But that was when OPEC had not been joined by the “plus” represented by Russia.
Indeed, the road to the strategic objective of self-sufficiency began in 2000 as OPEC successfully held its Second Summit which marked the departure from the $ 20/b.
Not only the Shale Revolution changed the oil premises for the strategy of a New American Century but also the gigantic additions to the oil reserves of the hemisphere mainly in Canada and Venezuela. This is well expressed in Bush’s Energy Plan.
Present low prices represent a serious challenge for the global strategic position of the US because the perspectives of exploiting the largest oil reserves of the Western Hemisphere and those of Shale oil and gas in American territory are at risk.