International Oil and National Security Essay

When oil fueled the navies of both Britain and the United States in World War I, it began the tremendous impact oil would have on the world. When British and French forces were threatened with oil shortages, the US gave the much needed help. Without the same assistance, Germany had to shorten critical operations. Since military hardware were all dependent on oil for power it became important that their countries have access to oil. Britain had access to Middle East oil and the United States had the oil from the Caribbean. After the war, Britain and the United States continued to dominate the oil industry of the world. The US has 4 large oil companies and Britain has 2. From the experience of World War II, control of the oil production for use in the military explains the success of the US and the defeat of Germany and Japan. The US rebuilt Europe and Japan with the assurance of oil supply. US had enough Venezuelan oil for its needs, set its eyes on the oil-rich Middle East. Oil is also seen as an important commodity for industries. To ensure its access Britain acquired concession rights on the oil of Iran, but it was not enough. The governments of Latin America refused to allow foreign government’s participation in their oil industries. Excessive supply had to be jointly managed which paved the way for developing oil sources in Iraq, Bahrain and Kuwait, as well as Mexico and Venezuela. The threat of war with Mexico and a crisis in Venezuela was defused with settlements and concessions. The lesson for the British was not ownership of oil reserves but control of sea routes that had more impact. A growing concern that US oil reserves are nearing depletion prompted oil companies to seek additional sources in order to serve domestic demand and supply foreign markets. They shifted their attention from the Caribbean to the Middle East. There has been a noted change in the structure of the global oil industry as well as in the triggers of consumption. The oil industry is important to national security, comes from non-renewable sources and oil reserves is dependent on the demand and supply of the commodity. The seven oil majors control 90% of oil reserves, produce 90% of oil, have a 75% refining capacity, and trade 90% of oil in the global market. In the middle of the 1950s there were small entrants, who challenged the majors, and who sold their oil at low prices. These pushed the world prices of oil downward. Oil consumption is a big part of the economy. Construction of highways and railways, purchase and registration of cars and trucks make America a great motoring nation and consequently a high gas-consuming public. Ever conscious of maintaining reserves the US relied heavily on oil imports to sustain its energy needs. As the Middle East has become its largest energy source, the US government is much concerned with maintaining the security and stability in the Middle East. Policy makers are looking for alternative, diversified and renewable fuel sources, efficient utilization and conservation measures to reduce the country’s dependence on oil imports taking into account their costs and benefits.