Petroleum scarcity has startling economical and political implications. On the economic front, Schwartz has suggested that a ten dollar increase in the cost of a barrel of oil may retard US economic growth by half a percent per year [1]. This economic turmoil underlies petroleum scarcity’s even more fundamental danger: if a decline in the supply of petroleum precipitates a rise in oil prices, oil-rich nations may gain an even more disproportionate degree of political clout in the world. Supply will fail to meet demand, and oil consumers struggling to alleviate the economic catastrophes associated with cost increases will be forced to accept any price offered by oil-rich nations.

Many of these oil-rich nations are unfortunately unstable, as almost two-thirds of the world’s oil supply is in the Middle East (Lugar and Woolsey, 1999). This dependency on the Middle East limits foreign policy options by forcing world leaders to appease and sometimes even actively support unjust autocrats in the region (Plesch, 2001). This hypocritical behavior certainly fuels terrorists’ hatred of the US. Further, according to Lugar and Woolsey (1999), consumers of oil contribute a great deal to the continuation of corrupt governments and perhaps even terrorism by direct infusions of money; over one trillion dollars will be funneled into the Middle East between 2000 and 2015.

The U.S. consumes far too much oil. The absence of any clear policy to reverse this trend is dangerous. Increased pollution and environmental damage alone require a new policy toward oil dependence. The specific costs of relying on large percentages of imported oil are also enormous, both economically and strategically.

Before the overthrow of the Shah of Iran, the two legs of U.S. policy in the oil-rich Gulf region were Iran and Saudi Arabia. With the victory of the Islamic Revolution, reliance on Iran ended, and U.S. policy has still not regained its balance. Foremost among the problems with current U.S. oil policy is that the cost of protecting Gulf oil, with the U.S. insisting on a unilateral defense strategy, is too high.

Despite their high dependence on Gulf oil, neither Japan nor Europe plays a major role in strategic defense of the region, and as long as its partners ante up cash for major operations like Desert Storm, the U.S. is prepared to continue to keep strategic command. Even without a crisis of Desert Storm proportions, oil from the Gulf ends up costing more than its per-barrel price because of billions in defense costs.

The U.S. became painfully aware of the need for a new oil policy after the oil shocks of 1973-75 and 1978-80. In 1973, the per-barrel price of Saudi light crude was $2.41. With the Arab oil embargo it quickly rose to $10.73. Then, beginning in 1978, the price of a barrel of crude shot up from $13.34 to $32.81. Since then the U.S. has been publicly committed to reducing dependence on foreign oil. However, despite repeated promises by both Democratic and Republican presidents, the U.S. has actually increased that dependence.

Instead of trying to wean the country from Gulf oil, Washington has focused on military-strategic efforts to ensure dominance in the oil region. However, its major approach, dual containment, is fundamentally flawed. Its stated purpose is to protect the flow of reasonably priced oil, yet it was imposed when oil prices were plummeting and the oil states were frustrated because of a glut on the market. In this sense, the large U.S. military presence in the Gulf, supposedly preventing Iran and Iraq from threatening oil supplies, is unnecessary. Furthermore, the current U.S. military presence has negative political consequences for the stability of the oil regimes, as seen in the latest attacks on the U.S. military installation in Saudi Arabia.

In addition, U.S. policy ignores some fundamental realities. First, neither the Iraqi nor Iranian regimes are likely to remain isolated forever. European countries, China, Russia, and other countries with interests different from Washington are all abandoning U.S. policy to consider trade with Iran and Iraq. Turkey, especially, is currently hurt by U.S. policy, deprived of the revenues generated when Iraq exported oil through a Turkish pipeline.

Isolating Iraq and insisting on the continuation of oil sanctions to weaken Saddam Hussein angers regional public opinion, since the Arabs perceive this policy as responsible for starving the Iraqi people. This anger will sooner or later be directed against regimes responsible for bringing U.S. troops to the region and could have grave consequences for oil flow and oil prices in Western countries.

Second, the attempt to exclude Tehran from influencing regional politics is unrealistic. The majority Shi`i community in Iraq, as well as oppressed Shi’i communities in other Gulf states with the capacity for destabilization, will certainly be influenced by neighboring Iran. The Saudi oil region is populated by Shi’i. Pushing Iran to the limits, coupled with the miserable conditions of the Shi’i in other countries, could bring about exactly the regional instability that the U.S. is trying to prevent. Saudi oil security, as defined by the West, is contingent on a pacified Shi’i population in Saudi Arabia’s eastern province.

Uncritical U.S. support for autocratic Gulf monarchies and their human rights abuses have weakened both U.S. policy and the oil regimes. It undermines U.S. policy by demonstrating the hypocrisy in American rhetoric about democracy and human rights and weakens the regimes by creating the perception among Gulf subjects that their countries are being ruled in the interests of an outside power. Even members of the Gulf’s ruling elite have a strong perception that the U.S. is forcing them to buy weapons that they don’t need and not allowing them to diversify their weaponry by purchasing arms from Europe. This creates tension between the U.S. and its European allies regarding Gulf procurement

1. Schwartz, N.D. (2003, March 31). Oil why prices will fall: because Iraq has been on the sidelines of the oil world for 20 years; soon it won’t be. Fortune, 147(6), 68+. Retrieved January 30, 2005, from Expanded Academic ASAP database (A98880222).
2. Yergin, Daniel, The Prize: The Epic Quest for Oil, Money & Power, NYC, Touchstone Books, 1993
3. Bernard Lewis, The Crisis of Islam: Holy War and Unholy Terror, Random House Trade Paperbacks; Reprint edition (March 2, 2004).
4. David G, Oil and development in the Middle East, Praeger Publishers Inc.,U.S. (July 1979)
5. Clement M Henry and Robert Springborg, Globalization and the Politics of Development in the Middle East, Cambridge University Press (September 17, 2001)
6. Asad Muhammad. The Principles of State and Government in Islam. Berkeley, CA, University of California Press, 1961.
7. Middle East Finance and Economy, Peak-oil theory and its development implications, online 19 January 2007.