Background: What the Iraqi Conflict Means to Oil
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ELIZABETH FARNSWORTH: Today the U.S. imports around 50 percent of its petroleum needs. Of that, Saudi Arabia supplies about 15 percent, other Middle Eastern countries like Kuwait provide another 2 percent. The rest comes from Venezuela, Canada, and Mexico, among other countries. We’ll get some perspective on the U.S. and foreign oil from three analysts, but first a background report by Charles Krause.
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CHARLES KRAUSE: The United States was largely energy self-sufficient before World War II, but the post war economic boom of the 1950’s began to change that. Demand for oil rose dramatically as the result of the country’s increased prosperity–two-car families–and the massive post-war shift of population from U.S. cities to the suburbs. Beginning in the 1950’s, U.S. consumption of imported oil also began to rise dramatically, so much so that by the 1970’s, fully half of all U.S. oil consumption came from foreign sources.
It was also during the 1970’s that renewed instability in the Middle East led Americans to question for the first time whether the U.S. had become too dependent on foreign oil. The Arab oil embargo in 1973 caused gas lines to become a familiar scene across the country. Prices at the pump also increased sharply.
Then during the long hot summer of 1979, Iran’s revolutionary government held not only U.S. citizens hostage, but also U.S. oil supplies. Prices again skyrocketed after Iran refused to sell Iranian oil to American oil companies. Finally, in July of 1979, the U.S. responded. Then President Jimmy Carter addressed the nation, calling the battle to achieve energy independence the moral equivalent of war. It was, he said, the moral equivalent of war.
JIMMY CARTER: To give us energy security, I am asking for the most massive peacetime commitment of funds and resources in our nation’s history to develop America’s own alternative sources of fuel: from coal, from oil shale, from plant products for gasohol, from unconventional gas, from the sun.
CHARLES KRAUSE: Besides developing alternative fuels, the new energy policy lowered speed limits, raised gasoline taxes, and promoted smaller, more fuel-efficient cars. The discovery of oil on Alaska’s North Slope also raised the possibility of less foreign dependence. But over the years, increased oil from the North Slope has been offset by shortfalls in other domestic production.
Environmentalists, meanwhile, have raised concerns about further exploration and drilling in Alaska, leaving the U.S. still dependent on oil imported from the Middle East. The Gulf War in 1990 was at least in part motivated by the U.S. need to protect Saudi and Kuwait oil fields, and oil was a primary reason the U.S. further expanded its semi-permanent military presence in the gulf after the war ended. Last June, the U.S. was reminded yet again of the instability in the region when 19 American airmen were killed by a truck bomb in Saudi Arabia.
Congress immediately held hearings to ask why there hadn’t been tighter security at the Dhahran base. But critics of both the administration and Congress say the real lesson of that attack was overlooked: the United States remains too dependent on Middle East oil and the loss of American lives is the price, and the loss of American lives is the price of that dependence. This week’s bombing of Iraq has once again focused attention on instability in the Gulf and how dependent the world is on oil from the Middle East.
WILLIAM PERRY, Secretary of State: Our objectives, first of all, are protecting our vital strategic interest, which means protecting our friends and allies in the region, Israel, Jordan, Kuwait, Saudi Arabia–secondly, keeping the flow, free flow of oil from the Gulf, which is a vital national interest to the United States, and, indeed, to the whole industrial world.