How Oil Dependence Fuels U.S. Policies
WSJ.com - How Oil Dependence Fuels U.S. Policies
By GERALD F. SEIB
Staff Reporter of THE WALL STREET JOURNAL
August 22, 2005; Page A2
From Iraq to China, from the Gaza Strip to Iran, the biggest foreign-policy problems of the summer all are setting off the same alarm: It is imperative for the U.S. to become more energy independent.
But that, of course, is precisely what Washington's policymakers have been unable, or unwilling, to accomplish. Instead, America's exposure to trouble in the world's volatile oil-producing regions actually is on the rise, even as the summer driving season heads toward its climax with oil near a once-unthinkable $65 a barrel. In brief, while the 20th century was the century of oil, the 21st already is unfolding as the century of whatever follows oil, or the century of fighting over what's left of oil -- or both.
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Question of the Day:2 Do economic threats or military threats pose a bigger challenge to the U.S.?
The omnipresence of oil in America's foreign calculations will be underscored this week. The interim government in Iraq -- an oil-rich country that's actually pumping less now than it did before the U.S. invaded -- will try again to write a new constitution that's supposed to start stabilizing the nation. At the same time, Israel will be trying to force out the final die-hard settlers in the Gaza Strip so it can be turned over to the Palestinians. There's no oil in the Gaza Strip, of course, but the whole episode is a wrenching reminder of how vulnerable the broader, oil-soaked Middle East remains to continuing upheaval.
Meantime, President Bush will be getting ready for a September meeting with China's president, Hu Jintao. Overhanging that meeting will be a nasty midsummer episode in which Congress effectively stopped oil company Cnooc Ltd. of China -- which has its own unquenchable thirst for oil -- from taking over an American oil firm, Unocal Corp. Simultaneously, the U.S. and Western Europe are cruising for a September confrontation at the United Nations with Iran, the world's fourth-largest oil producer, over the Iranian nuclear program.
If it seems that the odor of oil hangs over America's whole international agenda right now -- well, that's about right. "The overwhelming national-security issue is that we are becoming increasingly dependent for the lifeblood of an industrialized economy, oil, on the most unstable parts of the world," says Robert Hormats, vice chairman of Goldman Sachs International. "And there doesn't seem to be a sense of urgency about energy policy in this country."
Yes, Congress did pass an energy bill earlier this summer, after four years of dithering. But even its champions found it a bit of a letdown. It does open the way to more nuclear power and better use of coal for power generation, but doesn't promise to make a big dent in America's gasoline consumption, at least immediately. There are, among other things, hefty subsidies for ethanol, which should decrease gasoline use gradually over the longer term, and modest incentives for buying hybrid cars that burn less gasoline, but nothing revolutionary.
Meantime, oil imports as a share of total American oil consumption are more than 60%, up from about 50% a decade ago.
Cynics, of course, thought President Bush decided to invade Iraq to acquire its oil cheaply, but it turns out they were exactly wrong. Whatever the president's motivations in Iraq, one can hardly claim now that inexpensive oil was one of them. Not only is Iraq producing slightly less oil, but it is probably more vulnerable to terrorist supply interruptions than ever before.
Meanwhile, Iranian officials, facing a move at the U.N. this fall to punish it for running a covert nuclear program with definite weapons implications, are making noises about using the oil weapon to retaliate if necessary. As for the Gaza Strip, the struggle to expel Israeli settlers from a mere slice of a potential Palestinian state simply illustrates just how long and slow the road will be to creating a politically stable, nonextremist Middle East -- and one in which radical Palestinians can no longer call on their Arab brothers to use oil for leverage.
The tussle with China over Unocal, meanwhile, is a reminder that China now is America's primary and growing competitor for world oil supplies. Which leads to one very useful thought: Mr. Hormats suggests that when President Bush and Chinese President Hu meet next month, they set out to devise a plan for the two countries to become energy partners rather than energy competitors. That quest might well begin by paving the way for more U.S. oil companies to take their oil-finding and energy-extracting expertise into China to help pump up production there. Imagine, Mr. Hormats muses, if oil could be a source of cooperation instead of tension, for once.
Write to Gerald F. Seib at jerry.seib@wsj.com3
URL for this article:
http://online.wsj.com/article/0,,SB112466148445219046,00.html
By GERALD F. SEIB
Staff Reporter of THE WALL STREET JOURNAL
August 22, 2005; Page A2
From Iraq to China, from the Gaza Strip to Iran, the biggest foreign-policy problems of the summer all are setting off the same alarm: It is imperative for the U.S. to become more energy independent.
But that, of course, is precisely what Washington's policymakers have been unable, or unwilling, to accomplish. Instead, America's exposure to trouble in the world's volatile oil-producing regions actually is on the rise, even as the summer driving season heads toward its climax with oil near a once-unthinkable $65 a barrel. In brief, while the 20th century was the century of oil, the 21st already is unfolding as the century of whatever follows oil, or the century of fighting over what's left of oil -- or both.
CAST YOUR VOTE
1
Question of the Day:2 Do economic threats or military threats pose a bigger challenge to the U.S.?
The omnipresence of oil in America's foreign calculations will be underscored this week. The interim government in Iraq -- an oil-rich country that's actually pumping less now than it did before the U.S. invaded -- will try again to write a new constitution that's supposed to start stabilizing the nation. At the same time, Israel will be trying to force out the final die-hard settlers in the Gaza Strip so it can be turned over to the Palestinians. There's no oil in the Gaza Strip, of course, but the whole episode is a wrenching reminder of how vulnerable the broader, oil-soaked Middle East remains to continuing upheaval.
Meantime, President Bush will be getting ready for a September meeting with China's president, Hu Jintao. Overhanging that meeting will be a nasty midsummer episode in which Congress effectively stopped oil company Cnooc Ltd. of China -- which has its own unquenchable thirst for oil -- from taking over an American oil firm, Unocal Corp. Simultaneously, the U.S. and Western Europe are cruising for a September confrontation at the United Nations with Iran, the world's fourth-largest oil producer, over the Iranian nuclear program.
If it seems that the odor of oil hangs over America's whole international agenda right now -- well, that's about right. "The overwhelming national-security issue is that we are becoming increasingly dependent for the lifeblood of an industrialized economy, oil, on the most unstable parts of the world," says Robert Hormats, vice chairman of Goldman Sachs International. "And there doesn't seem to be a sense of urgency about energy policy in this country."
Yes, Congress did pass an energy bill earlier this summer, after four years of dithering. But even its champions found it a bit of a letdown. It does open the way to more nuclear power and better use of coal for power generation, but doesn't promise to make a big dent in America's gasoline consumption, at least immediately. There are, among other things, hefty subsidies for ethanol, which should decrease gasoline use gradually over the longer term, and modest incentives for buying hybrid cars that burn less gasoline, but nothing revolutionary.
Meantime, oil imports as a share of total American oil consumption are more than 60%, up from about 50% a decade ago.
Cynics, of course, thought President Bush decided to invade Iraq to acquire its oil cheaply, but it turns out they were exactly wrong. Whatever the president's motivations in Iraq, one can hardly claim now that inexpensive oil was one of them. Not only is Iraq producing slightly less oil, but it is probably more vulnerable to terrorist supply interruptions than ever before.
Meanwhile, Iranian officials, facing a move at the U.N. this fall to punish it for running a covert nuclear program with definite weapons implications, are making noises about using the oil weapon to retaliate if necessary. As for the Gaza Strip, the struggle to expel Israeli settlers from a mere slice of a potential Palestinian state simply illustrates just how long and slow the road will be to creating a politically stable, nonextremist Middle East -- and one in which radical Palestinians can no longer call on their Arab brothers to use oil for leverage.
The tussle with China over Unocal, meanwhile, is a reminder that China now is America's primary and growing competitor for world oil supplies. Which leads to one very useful thought: Mr. Hormats suggests that when President Bush and Chinese President Hu meet next month, they set out to devise a plan for the two countries to become energy partners rather than energy competitors. That quest might well begin by paving the way for more U.S. oil companies to take their oil-finding and energy-extracting expertise into China to help pump up production there. Imagine, Mr. Hormats muses, if oil could be a source of cooperation instead of tension, for once.
Write to Gerald F. Seib at jerry.seib@wsj.com3
URL for this article:
http://online.wsj.com/article/0,,SB112466148445219046,00.html
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