Reducing Dependence On The Gulf

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The Iranian Revolution of 1978 reduced the flow of Middle Eastern oil by around 3.5 million b/d for six months, and was followed by a second world oil price surge the following year. Coming on top of the 1973 Arab oil embargo, this seemed to further underline America's now problematic dependence on Middle Eastern oil. Although the Carter Doctrine offered a robust challenge to any force which contemplated a threat to America's position in the Gulf, to many it now appeared that what had originally been a means of ensuring energy security -importing Middle East oil - was now a poisoned chalice which could ultimately prove highly toxic to America's interests, especially its long-standing interest in supporting the state of Israel. In short, America might now have to trade its support for Israel against its need for oil.

Concern over the vulnerability of Gulf supplies was heightened even more by the outbreak of the Iran-Iraq War in October 1980, when oil supplies were again interrupted, this time by 3.3 million b/d for three months. Against this background, Melvin Conant, former Senior Government Relations Counsellor for Exxon and the Federal Energy Administration's Assistant Administrator for International Affairs during the 1973-1974 oil crisis, published the first comprehensive analysis of the USA's energy security problems in a monograph sponsored by the Council on Foreign Relations.29 Among the policy measures Conant identified as being of critical importance 'the most fundamental „.is to reduce dependence on the Gulf.'30

Conant also argued that a major contribution to this objective would be a 'hemispheric energy effort' linking oil producers in Canada, Mexico and Venezuela to the US market. 'The American interest,' Conant argued, 'is clearly in maximising supply from these countries to reduce dependence on the Gulf.'31 In this context, Conant applauded President Reagan's proposal for a 'North American Accord' (eventually realised in 1993 as the North American Free Trade Agreement - NAFTA), which was intended to integrate the energy economies of the USA, Canada and Mexico. Conant believed that there should also be 'an invitation to Venezuela to think through the implications to itself of participating in an accord.'

We shall look in greater detail at Venezuela and the idea of the hemispheric 'accord' in Chapter Seven. For the time being, let us examine the extent to which the USA did succeed in diversifying its oil imports away from the Gulf at this time. Total US oil imports fell between 1980 and 1985, from 6.4 million b/d to 4.3 million b/d, partly as a result of the general downturn in the US economy following the steep oil price increase in 1979-1980. Imports from the Gulf also fell substantially, from 1.5 million to 0.3 million b/d. At the same time, imports from what might be considered the 'safe areas', the UK, Canada, Venezuela and Mexico, which in 1980 had been approximately the same as those from the Gulf, increased and began to replace Gulf sources during 1981-1985. By 1985, as little as 2 per cent of total US petroleum supplies came from the Gulf.

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