Erstellt am: 10.07.2006 Autor: Edward Roby Status: Bisher nicht definiert
The geopolitics of gasoline
The white-hot political issue in America these sultry summer days is not terror, torture, war or corruption. It’s the rising price of gasoline. This additional expense makes Americans hopping mad, as disclosed by at least six recent voter surveys, which may surprise European motorists who pay twice as much at the pump.
Few things illuminate the transatlantic divide in political culture quite as clearly as contrasting attitudes toward energy, the sine qua non of the West’s industrialized societies. Unlike in the United States, there is no such grassroots price debate in the big continental European countries, where expensive energy is the norm, domestic sources are scarce and crude oil has always come from afar.
An open discussion of Europe’s pricey energy could quickly boomerang into demands for tax rollbacks – 40% of the German electricity bill and upwards of 70% of the retail price of gasoline being public revenue. Such talk would not be high on the agenda of either the finance ministers or the articulate interests that benefit from industrial and agricultural policies financed with heavy energy taxes and related subsidies.
In the United States, however, cheap, lightly taxed energy is seen as a birth right which elected officials question only at their peril. Major political opinion polls1) published in May and June revealed what dark thoughts U.S. voters are harboring about the recent rise of the gasoline price to around $3 a gallon, including fuel tax of only about 13%. By margins ranging from 72% to 79%, respondents to five polls registered disapproval of the way President Bush and his government were handling this No. 1 national vexation.
With a congressional election coming this autumn, 57% of the respondents to a New York Times/CBS News poll published in May said the opposition Democrats would do a better job with gasoline. Similar findings of several other surveys also tentatively lifted the gasoline price to the killer issue of the current congressional election campaign. It could help determine whether Bush’s party can defend its legislative majority against heretofore feckless Democrats who now seem to have a tiger in their tank.
Around 40% of the country’s refinery output is burned on U.S. highways. Cheap fuel for the family’s automobiles is as much a feature of the American lifestyle as hotdogs and baseball. Roughly 300 million highly mobile Americans operate 217 million cars, about 30% of the worldwide fleet. This is at least part of the reason why the United States, where energy efficiency in industrial production is otherwise on a par with that of Europe, still consumes one-quarter of the world’s energy for the needs of less than 5% of the world’s population. Although some U.S. voters may be vaguely uncomfortable with that discrepancy, expensive gasoline is viewed as the greater evil.
Price terror at the pumps
The Republican government, studded with heavyweights from the oil industry, was not collared in these spring polls as the main culprit for the rising gasoline price. Primarily blamed by the voters in all these surveys were their own oil companies, which have been booking record profits, followed by foreign oil-producing countries. The stewardship of President Bush finished only third as a suspect in the perceived price terror at the gas pumps.
That perennial European villain, “supply and demand,” scarcely merited mention in the U.S. opinion surveys, suggesting that the American public may be somewhat better informed on this matter. U.S. motorists obviously agree with the market analysts and such experts as Ali Naimi, Saudi Arabia’s powerful oil minister. As the spot market price of crude was spiking toward $75 a barrel during the spring, he told The Wall Street Journal that the current oil market was both overpriced and oversupplied. What is roiling the energy world, the newspaper’s interviewers concluded in a definitive June 14 article, “is an enduring shift in the balance of power between the fuel-guzzling West and oil-rich developing countries.”
But war in the oil fields – and the threat of a wider war through a U.S. strike against Iran – failed to register with either the U.S. pollsters or their respondents as a serious price driver. This seems a bit odd because an older U.S. generation easily recognized a less spectacular jump in the oil price -- to $35 a barrel in 1981 from $14 in 1978 – as the combined backlash from the Israel-Arab conflict, the 1979 Iranian Revolution and Iraq’s 1980 attack on Iran. In those days United States imported barely half its crude oil. Now, it imports three-fifths.
Yet, today’s concurrent demands for alternative-fuel crash programs and drilling in public preserves suggest that an increasing number of U.S. voters do make a tentative connection between the price of their motor fuel and the uncertain sources of the crude oil from which it is refined. As one Iraq-war critic wryly put it, the feeling is: How did our oil get under their sand? Yet, the president in a speech to the country this year expressed his own uncharacteristic concern about growing a U.S. dependency upon foreign oil, calling it an addiction.
Coming amid spreading voter dissatisfaction with climbing gasoline price, his passing remark sparked speculation on whether the current government might actually take action to reduce this foreign dependency. Anxious debates about foreign dependency and national security had also accompanied the oil shocks of 1974 and 1978-79, spawning programs, conferences, press seminars, academic papers and alarming books. The Dependency Dilemma: Gasoline Consumption and America’s Security, a book-length collection of expert opinion and essays gathered by Harvard University’s Center for International Affairs, was typical of the crop of 1980. After examining such unpromising options as rationing and alternative fuels, the consensus of these experts focused on the European solution: a hefty tax on gasoline. Robert H. Williams, a Princeton University professor, argued that a tax of $2 a gallon, compared with the $0.12 tax of that period, would work economic wonders in solving this problem through conservation and a change in lifestyle.
There was, of course, no U.S. political constituency for expensive gasoline. Then, as now, it is viewed as un-American. Apart from a few token programs to subsidize synthetic fuels or fuel alcohol made from corn, nothing much happened. U.S. crude oil imports practically doubled from one-quarter of all the oil refined in 1970 to nearly half in 1980, the year following the Three Mile Island nuclear accident, the second Arab oil shock and the overthrow of the shah. Today, the United States imports 60% of its crude. And the U.S. answer to the “dependency dilemma” continues to be sought not at home but there where it has always been seen: in the sands of the world’s major oil fields.
Their sand, our oil
In his State of the Union address of Jan. 23, 1980, President Jimmy Carter announced that the United States would use its armed forces to defend its national interests in the Persian Gulf region. This Carter Doctrine, drafted by presidential national security adviser Zbigniew Brzezinski, carefully limited such an armed response to the Cold War threat of “an outside force” to the free movement of Middle East oil. It was a clear warning to the Soviet Union, which had just invaded Afghanistan, only 400 miles from the Persian Gulf. And it reinforced the expressed 37-year-old U.S. commitment to protect its oil-rich ally, the kingdom of Saudi Arabia.
Although the Cold War ended 16 years ago, the Carter Doctrine has apparently evolved beyond a response to an outside force. During the Iraq-Iran war of the 1980s, in which a U.S. warship shot down an Iranian airliner, it was used notably to protect Persian Gulf oil shipping from Kuwait and Saudi Arabia in what came to be called the Reagan Corollary. It has also been cited by some foreign policy experts to explain the armed interventions of 1991 and 2003 in terms of the region’s “internal stability” rather than an external threat. But the recurring theme of regional policy actions over the years seems to be the control of petroleum resources.
The effects of the last two interventions against Iraq therefore pose a question with respect to the current gasoline price. Do U.S. policy makers actually share the keen interest of the U.S. electorate in having cheap oil? The movement of the world price of crude is a useful guide. Weakening oil prices in the late 1980s caused the capping of wells in the western U.S. oil-producing states, depressing construction, triggering defaults and precipitating the collapse of savings and loan banks, which required a $1 trillion taxpayer bailout. But the oil price instantly doubled with Iraq’s August 1990 invasion of Kuwait2), which provoked a U.S. response in which the Basra oil field also was bombed in early 1991.
“Middle East oil is the West’s lifeblood,” Gen. Norman Schwarzkopf told Congress in 1990, before leading that first U.S. war against Iraq. “It fuels us today, and being 77% of the free world’s proven oil reserves, is going to fuel us when the rest of the world runs dry.” Iraq’s oil reserves make it the closest rival to Saudi Arabia. And Iran, now in the limelight, has natural gas reservoirs to match its abundant oil.
World crude prices quickly retrenched after the 1991 conflict, falling in 1994 after inflation adjustment to their lowest level since 1973 because the market was more than adequately supplied. This occurred in spite of the fact that Iraqi’s oil output had been severely curbed by bombs, embargo and UN sanctions, a tourniquet for “the West’s lifeblood” but a financial blessing for other producers and the major oil companies. For Iraq, the outcome was reminiscent of the Red Line Agreement of period 1928 to 1948, a politically backed cartel of Western oil companies that conspired to keep Iraqi oil in the ground in order to support the prices of their other oil regional sources.3) Continuing friction with Western oil interests there led to Iraq’s oil industry nationalization in 1972.
Moving ahead to the current conflict, the U.S. refinery acquisition price of imported crude averaged $22.81 a barrel in 2002, the year President Bush proclaimed his new doctrine4) of military dominance and pre-emptive war that preceded the attack on Iraq in 2003. This time prices have risen steadily since October 2003 when it became clear that an insurgency was spreading. Currently near $75, the world spot price now gyrates visibly with news updates on the new confrontation with Iran, the No. 4 crude oil exporter with the world’s second-largest natural gas reserves. Oil earnings have risen apace with such developments. The profits of the five largest U.S. oil companies were a combined $89 billion in 2005, triple their level of 2002.
The U.S. gasoline price has apparently sustained collateral damage. But the oil supply is at its highest level in history, market participants say. “The world is very well-provided with both inventories of oil and gas, growth in oil and gas and increasing surplus production capacity,” British Petroleum Chief Executive Officer John Browne told reporters in Washington on June 16. He chided those who were “overdoing the anxiety.” Other experts blame the futures market for driving up the world oil price much more than would otherwise be justified by any recent fluctuations in supply and demand for oil. They argue that the volume of speculative money tracking commodities indices has risen to $70 billion today from only $8 billion in 2001.
Empowering strategic competitors
Apart from hapless Iraq, the major oil producing countries have benefited greatly from a price surge that is far out of proportion to any rise in global demand. “We can easily say that this has been a tremendous boon to the Russian economy, and to Russian state finances,” Leo Drollas, chief economist of London’s Center for Global Energy Studies, told Radio Free Europe interviewers on April 20, 2006. The petroleum-rich former superpower, which triggered a ruble-selling panic in August 1998 when it defaulted on $40 billion in domestic debt, said in June 2006 that it would repay its foreign creditors ahead of schedule. The biggest creditor, Germany will receive €8.4 billion this year.
On July 1, Russian Finance Minister Alexei Kudrin was able to announce the lifting of currency controls as a step toward making the country’s ruble currency fully convertible as Western countries have demanded. “This will increase investors’ interest in Russia,” he said. The move delivered on a pledge by President Vladimir Putin, who also proposed to his parliament last spring to open an oil and natural gas exchange based on rubles. “Our goods are traded on world market. Why not with us?” he asked in a rhetorical allusion to the fact that the world’s petroleum exports are still priced in dollars.
Germany, which has joined Russia in launching a pipeline directly connecting the two countries through the Baltic Sea, obtains 36% of its imported natural gas from Russia, which has the world’s largest gas reserves. The EU has expressed support for this €6 billion project, which is being supervised by former Chancellor Gerhard Schröder. But the foreign minister of Poland, astride the existing pipeline link between Germany and Russia, compared this project to the Hitler-Stalin Pact. Ostensibly over a price dispute last winter, Russia had briefly curtailed gas supplies to the Ukraine, which had been flirting with the idea of hosting U.S. bases and joining NATO. Even in Europe the issue of energy security and control of energy resources apparently tops the global security agenda this new century.
Russia is second only to Saudi Arabia in proven oil reserves. Four-fifths of its oil supplies Europe and provides 29% of Germany’s imported crude. But Russia has refused to sign a European energy charter that would have imposed a sort of international control over its energy resources and delivery means. Its government has instead insisted upon market opening for its companies to Europe’s lucrative energy distribution industry through acquisitions and access to infrastructure. “Energy security means the security of all: the producers, the transit countries and the consumers,” Germany’s foreign minister said in a Delphic comment on the matter in Handelsblatt newspaper on March 23. Western European countries normally applaud liberalization and globalization. But some have been resisting market-opening reciprocity to the Russian energy producers. Yet, the energy security they seek might be elegantly guaranteed by market forces if, for example, Gazprom or other Russian energy companies had significant downstream business in industrialized western Europe.
Fast-developing East Asia, meanwhile, is eager to purchase gas and oil from Russia, which next year will start building an $11.5 billion pipeline to supply China, Korea and Japan. In mid-2001, perhaps in response to a fresh U.S. move to modernize its nuclear weapons arsenal, Russia and China launched the Shanghai Cooperation Organization together with the former Soviet republics of Tajikistan, Kazakhstan, Uzbekistan and Kyrgyzstan. Although its founders say it has no plans to become a military bloc, it has already sponsored joint military exercises and its stated purpose is security cooperation. India has been invited to join and Iran has applied for membership. With NATO engaged in Afghanistan and new U.S. bases seeded in the region, this development raises the strategic stakes in the competition to secure oil deposits around the Caspian Sea.
A financial China syndrome?
Not even the possible formation of a competing Eurasian alliance stretching from the Baltic Sea to the Pacific would seriously challenge the four-year-old Bush Doctrine of keeping U.S. “military strengths beyond challenge.” U.S. military outlays comfortably match those of all other countries combined. Yet, this advantage rests increasingly upon deficit spending, partly financed by foreigners to whom the United States already owes a net $2 trillion. The national debt, $5.6 trillion when President Bush took office, has zoomed past $8.2 trillion, forcing Congress to raise the borrowing ceiling to $9 trillion last March. Projected to reach a record $423 billion this year, the U.S. deficit is roughly the size of the rising Pentagon budget, a proposed $419 billion for 2006. “There is something odd about the world’s greatest power being the world’s greatest debtor,” former U.S. Treasury Secretary Lawrence Summers is quoted as saying.
The fact that strategic competitor China, holding an estimated $825 billion in U.S. Treasury paper, has become the biggest U.S. creditor is a mixed blessing. Access to the U.S. market for its trade goods has speeded its industrialization, while giving it a stake in the stability of the dollar-dominated global financial system. But China has been scouring the planet for bilateral supply deals with petroleum producing countries, arrangements that could also potentially undermine the international convention of dollar pricing. And China has reportedly negotiated a $100 billion oil and gas deal with Iran. It might be disinclined to amass even more dollar IOUs, if they should inadvertently help to finance a U.S. policy that would disrupt China’s vital energy supplies.
The intensifying global competition for energy resources obviously has sweeping implications for an international financial system lubricated by petrodollars. This system also tends to channel the gains of agriculture, manufacturing and resource extraction throughout the world through a mighty tertiary financial sector focused on London and New York. Military policy initiatives that risk destabilizing such a system could prove counterproductive for the West. This consideration, which easily trumps mere energy security, is arguably shaping up as the main constraint on the application of the Bush Doctrine in the Middle East.
The U.S. foreign policy debate, meantime, has apparently penetrated even the confines of the neo-conservative Pentagon. Senior military officers are urgently telling their civilian bosses that an attack on Iran could have serious political, economic and financial consequences for the United States, award-winning journalist Seymour Hersh documented at length in the July 10 edition of The New Yorker magazine. Their arguments back up private advice offered by European leaders to the Bush administration, he said. And a conservative realist faction of U.S. geopolitical luminaries, including Professor John Mearsheimer of University of Chicago, has already called for a new direction of U.S. policy toward the Middle East. It would be ironic, if the clinching argument on this subject turned out to be something as banal as the domestic political fallout this November from an elevated U.S. gasoline price.
Notes:
- 1.The surveys were those of ABC News/Washington Post, Pew Research, Newsweek, CBS News/New York Times, AP Ipsos and Quinnipiac University. Results were published on Internet at www.pollingreport.com
- 2.U.S. Senate hearings dissected the controversial 1990 audience Saddam Hussein accorded the U.S. ambassador to Iraq, April Glaspie, just before the Kuwait invasion. The ambassador cited sympathy in the United States with Iraq's desire for a stronger oil price and said that her government regarded Iraq's long-standing Hashemite border dispute with Kuwait as an inter-Arab matter. Transcripts of the meeting were published on Internet at www.geocities.com and www.chss.montclair.edu. The episode was revisited in late 2005 by Kaleem Omar in a backgrounding article, www.jang.com.pk, for a Pakistani newspaper.
- 3.Dr. Ferruh Demironen, “Oil in Iraq: the Byzantine Beginnings,” Global Policy Forum, April 26, 2003, www.globalpolicy.org; James A. Paul, “Great Power Conflict over Iraqi Oil,” Global Policy Forum, October 2002, www.globalpolicy.org
- 4.The policy concept now known as the Bush Doctrine was announced by President Bush in a speech to the new graduates of the United States Military Academy at the West Point, New York, on June 1, 2002. “America has, and intends to keep, military strengths beyond challenge -- thereby, making the destabilizing arms races of other eras pointless, and limiting rivalries to trade and other pursuits of peace,” Bush said. The published address is found on Internet at such sites as www.mtholyoke.edu The president’s concept was then incorporated into the new National Security Strategy of the United States, published by the government in September 2002.
