Is It All about the Oil?

“It’s all about the oil” has been a persistent refrain in response to US Middle East policy for as long as one can remember. Certainly there is much truth in this statement. Since the energy transition from coal to oil and its derivatives, leading imperialist powers have sought to dominate or control global oil resources. And the center of global oil extraction, especially for the US and other powerful capitalist countries, has remained in the Middle East and its periphery. 

When the navy of the then-dominant British Empire shifted from coal-fired, steam-driven warships to dependence on oil, the Middle East became the strategic service station for imperial reach. Accordingly, the status and fate of people, nations, and states in the Middle East became inextricably bound to the interests and the will of the greatest imperial powers. 

After World War I, the British and French hacked and hewed the Middle East into “protectorates” beneficial to their own economic interests. The US, self-sufficient in oil resources, was pushed to the margin-- left to explore the vast underpopulated deserts of the Arabian peninsula. 

Of course the vast expanses of the Arabian peninsula turned out to be the source of vast and cheap oil and natural gas. The Arabian-American Oil Company (ARAMCO) proved providential when US domestic energy reserves began to decline.

As the dominant imperialist power after World War II, the constabulary for the capitalist world, the US took on the task of guaranteeing that oil would be safe and within reach throughout the capitalist world and outside the reach of its Cold War foes and their allies. This necessitated a powerful and agile military. Since oil and gas are transported by sea and pipeline, the US military was ensconced in bases globally, and the US enlisted heavily armed deputies at key positions in the midst of energy-rich areas (pre-revolutionary Iran, Israel, Saudi Arabia, etc.). 

The US (and its closest, most trusted NATO allies) did not serve as a global gendarmerie for free; rather, they extracted a tribute from the oil-producing countries and their peoples. With colonial fetters rapidly breaking after World War II, imperialism established new modes of dominance over the world’s raw materials, including energy resources. Neo-colonial relations replaced total dominance with economic dominance. Despite nominal political self-rule, resource-rich “independent” countries were still the captive of US corporations and their European counterparts. US and European corporations “participated” in the development and ownership of gas and oil resources.  

Because oil and gas are so central to modern economies, imperialist powers display a keen interest in ensuring low, stable prices. Thus, the US and other imperialist countries have invested heavily in oil and gas extraction throughout the world, while installing, when necessary, friendly governments in resource-rich countries. 

Of course even the most empire-friendly governments have sought more of the fruits of resource extraction from their lands. Saudi potentates, among others, have restructured deals, formed production alliances (e.g., OPEC), and exerted their power over global supplies for political purposes. Notably, OPEC producers punished Western countries for their support of Israel with an oil embargo in 1973. 

The 1973 oil embargo proved to be a turning point for imperialism’s relations with the oil-producing states of the Middle East. Differences within imperialism restrained the considered US use of military power to “...forcibly seize Middle Eastern oilfields in late 1973.” Taking advantage of these differences, the Saudis and other countries were emboldened to nationalize their industries and command a measure of independence from Western imperialism. In some cases, the dramatic increase in oil dollars flowing into the oil-producing states’ coffers led to equally dramatic improvements in the lives of citizens (Libya, for example). In other cases, oil dollars only enriched the elites. And, in the case of the Saudis, the enormous bounty of oil-revenue went to promote Wahhabism and an ultra-conservative sectarianism against progressive and radical secular movements in the Middle East and elsewhere.

The US and Israel were successful in channeling Saudi money and resources in support of their own foreign policy objectives, notably by marginalizing, even combatting non-sectarian Arab nationalism, socialism, and anti-imperialism in Palestine, Afghanistan, and many other states. From the rise of Nasserism until today, imperialism and the most reactionary Islamic conservatism have used sectarianism to counter, even destroy, progressive movements. Oil money has subsidized that effort. 

Since the victory over imperialism and sectarianism in Syria, we are beginning to see the encouraging rise of class-oriented, non-sectarian struggles in other countries like Sudan, Lebanon, and Iraq. The setbacks to Saudi Arabia and its Gulf allies in Yemen have also paved the way for a higher, more advanced level of struggle with less of the pernicious confusion of tribal and sectarian division. While there is always a danger of imperialism using the new militancy for its own purposes, it is operating from a weakened position.

US Oil Imperialism Today

“I always said, if you are going in, keep the oil.” -- Donald Trump

Commentators were abashed by Trump’s audacity when he linked involvement in Syria with expropriating Syrian oil. Most were embarrassed that Trump publicly exposed that oil thievery so easily ties in with US foreign policy goals. They preferred to mask US objectives behind an almost comical alarm that ISIS would rise again without US presence. This thin excuse stood in sharp contrast to the fact that the entire US military engagement combating ISIS was through air power.

So, is the US meddling in Syria, Iraq, Saudi Arabia, Libya, and other countries to steal, secure, or expropriate energy sources? Are these instances of the century-old imperialist plunder of global energy sources?

Certainly US imperialism and its allies continue to serve monopoly capitalist concerns in their quest to exploit global resources. But that is not the entire story today. 

Thanks to the fracking, shale oil revolution, the US is also an intense competitor with global energy producers. This is a new twist that is now shaping US imperialist policy, moving it in other directions. With the US today exceeding the oil and gas production of all other countries, it is less committed to securing, commandeering, protecting, or exploiting global energy resources and more directed toward garnering a greater market share of worldwide sales. 

The war-- and it is war-- for more markets for US energy supplies favors the US when other suppliers are threatened, made less reliable, or more costly by wars, political upheavals, or other causes of chaos. Where US post-war, Cold War oil politics were directed toward stability, low, constant prices, and secure transit, the US benefits today from global instability, volatile prices, dangerous sea routes, and thwarting pipeline infrastructure.

The endless US wars, the stirring of big-power hostility, saber-rattling in sea lanes, blatant military action against stable energy-producing states, and inflated threats of terrorism and banditry all contribute to favoring energy supplies from a politically and economically stable state with the most powerful and far-reaching military in history-- the US.

It is important to place US-induced chaos in the perspective of no real, existing imminent threat from any major power or from so-called “terrorism.” Nearly all of the global chaos is simply manufactured and sustained by imperialism.

US determination to reign over energy markets was decisive in warding off the Saudi price attack of 2014. With production costs half or less of those for US shale, the Saudis, through both calculated collective inaction and overproduction, drove the price of oil down from historic highs, hoping to cripple the vastly expanding US shale market. Saddled with debt piled up from exploration and the high initial costs of rigs, the emerging US shale industry struggled in the face of collapsing prices. But Wall Street came smartly and decisively to the rescue; the loans are only beginning to be called in today. 

With oil-producing Libya a failed state, with oil-producing Iran expelled from commerce, with the Persian Gulf becoming a war zone, with oil-producing Venezuela sanctioned from markets, with Boko Haram disrupting Nigerian oil production, with giant oil-producing Russia forced into a new Cold War, with the Saudis about to sell chunks of ARAMCO to US and other capitalist investors, and now with Donald Trump keeping Syrian oil out of global markets, the US is busy hustling its oil as the most reliable and readily available. 

The same could be said for the US efforts to expand its markets for liquified natural gas. The manic desire to depict Russia as an existential threat looming on the borders of Eastern and Central Europe is meant to stigmatize Russia as a dangerous partner and undermine its standing as the chief supplier of inexpensive, pipeline-supplied natural gas to Europe. Accordingly, the US hopes to kick open the door to that market by establishing LNG terminals in the most anti-Russian states. Similarly, the chaos in the Straits of Hormuz and Iran-bashing have cast a shadow over the reliability of the US’s biggest LNG competitors: the vast Iranian and Qatar gas fields.

In this competition for global energy markets, the US relies upon economic sanctions as its weapon of choice, especially shutting down trade activity of its energy rivals.

Where imposing stability on a capitalist world dependent upon energy imports was the former goal of US imperialism, overproduction of energy from revolutionary technologies has set new goals. Because the US lusts after the traditional markets for oil and natural gas, US imperialism is content to live with, to even foster global instability. It is no accident that endless destructive wars, global hotspots, threats, and hostilities are features of the twenty-first century. 

Bolstering energy exports and arms sales makes the US the biggest troublemaker in a volatile, ultra-competitive capitalist world. 

US energy imperialism makes an already unstable world even more dangerous.

Greg Godels

zzsblogml@gmail.com

US Imperialism: Changing Direction?

 

Developments over the last few weeks further remove the fog obscuring the foreign policy objectives of the US ruling class. A series of seemingly unrelated events casts light on the goals of US policy makers in an era of intensifying international rivalries. Further, it is becoming clear that President Trump is now largely deferring to the ruling-class consensus on foreign affairs; his straying from the fold has been substantially checked.

 

In February, I wrote of the implications of the widely ignored shift in the status of the United States from an energy-seeking, petroleum-importing country to a net exporter, a trader in all energy resources.

 

The US still has a significant but shrinking position in the international export of coal. Of course, coal use is both third in importance among hydrocarbons and shrinking in use (coal production internationally fell by the largest percentage on record in 2016). But petroleum imports became essential to fuel the critical transportation needs of the US as well as the massive military machine in the mid-twentieth century. 

After the oil crisis of the 1970s, dependence on petroleum imports became even more acute and an even more vital factor in setting US foreign policy. Often, and for good reason, the left was quick to associate the thirst for energy resources with war-mongering and neo-colonial intrigue.

 

But matters are changing rapidly, even if many seek to obscure or ignore the new reality. As I argued in February:

 

Matters began to change in the last decade, with US domestic oil production nearly doubling between 2010 and 2014. In the last few years, US oil production has reached levels in line with the world’s largest producers, Saudi Arabia and Russia. For the first time in decades, the US is again exporting extracted energy products. In fact, many experts expect the US to become a net energy exporter in the next decade.

 

The evidence has only mounted since the February posting. Despite low prices of oil, US drillers are producing like there is no tomorrow. From its low in mid-year 2016, the rig count has nearly doubled in North Dakota. As the Wall Street Journal reported on June 19, the big companies, Chevron, Royal Dutch Shell, and Exxon Mobil are investing tens of billions in the Permian region of the Southwestern US. The giant multinational, monopoly-capital producers are stepping in where smaller producers have failed because of costs and limited capital. They are projecting Permian production at 4 million barrels a day within a decade, about the production of modern-day Iraq. Chevron, alone, anticipates a four-fold increase of Permian production within a decade. Exxon is projected to spend half or more of its massive investments in the next three years on North American oil production.

 

Where will this oil go?

 

In a June 8 article, Wall Street Journal writer Lynn Cook stated bluntly: “American [US] oil exports are emerging as a disruptive new force in global markets.” From January to April, US suppliers shipped 110 million barrels to foreign destinations, chiefly India, Hong Kong, and Denmark. Asian buyers account for 39% of purchases, with China showing, by far, the greatest growth. With massive production increases coming online, is there any doubt that US producers will be competing furiously with OPEC and other traditional exporters for existing and new markets? Should we not expect the foreign policy and the covert and overt military strategies to reflect this intensifying competition?

 

Similarly, the US is becoming an increasingly important exporter of natural gas. As new technologies of liquefying and shipping natural gas are implemented, the competition for markets is becoming ever more ruthless. Seaborne liquid natural gas accounts for 40% of the market today. As the world leader in natural gas production, along with Russia, the US has a strong interest in exporting natural gas and acquiring new markets. Among the exporters of liquid natural gas (LNG), Qatar is the world leader, with every intention of maintaining its position, recently opening its North field, believed to be the largest gas reservoir in the world.

 

Geopolitical Implications

 

The long fostered model that views US imperial interests as served by the US securing and protecting its access to energy sources, by guaranteeing energy for its Cold War allies, is in need of a new look. Today, US interests lie in acquiring markets within the global economy, competing with other energy suppliers, and creating political and economic conditions favorable to US suppliers. Oil, gas, and energy remain central to the imperialist enterprise, but the roles are shifting in important ways, with important implications.

 

I sought to define that role more clearly in February, when I wrote:

 

It should be clear, then, that the approaching oil independence of the US, the changing role of the US from consumer to producer, and the attention to markets-for-oil over sources-for-oil profoundly influences US strategic policies, including the weakening or souring relations with other major oil-producing nations like Saudi Arabia and Russia.

 

Events have only strengthened that observation. The rabid, crude intensification of hostility toward Russia, the renewed demonization of Iran, the sudden and bizarre isolation of Qatar, and the heightened aggression in the numerous destabilizing wars throughout the Middle East underline the evolution of an emerging foreign policy consistent with securing new energy markets.

 

The introduction and expansion of US military forces to hot spots like Syria, Iraq, and Afghanistan promise little resolution of the conflicts, but guarantee further instability of energy sources and the flow of hydrocarbons. The sale of a vast cache of military weaponry assures the deepening and lengthening of the Saudi incursion into Yemen.

 

The unexpected hostility toward Qatar shown by the other Gulf States in the wake of Trump’s recent vulgar performance in Riyadh, Saudi Arabia is likely directed against Qatari global leadership in the exporting of Liquid Natural Gas, the market that the US hopes to further penetrate. It is no accident that the Qatari gas fields are jointly owned with Iran and both countries have cooperated in the exploitation of the fields and the production of LNG. At the same time, the Saudis have surrendered in the price war with US shale drillers. With sovereign wealth shrinking from a costly war and low oil prices, the Saudis are more interested in finding the best moment to take ARAMCO public, to sell off portions of the national oil company and refresh the kingdom’s coffers. The king and his retinue are content to loyally serve the US in its global mission to command energy markets. Saudi leadership of OPEC in its fight for market share with US petroleum producers proved disastrous. The Saudi/OPEC output cut “has been deemed an OPEC failure and a US production win,” according to Tony Hendrick of CHS Hedging, as quoted in the WSJ (6-21-17).

 

The latest US anti-Russia (6-15-17) sanctions are clearly directed at markets for Russian natural gas. The Senate voted 98-2 to “broaden sanctions on Russia’s energy sector,” as reported by The Wall Street journal. While the message might have been lost on the mainstream media, wallowing in neo-McCarthyism, and while it might have been missed by a distracted left, it was not lost on Europeans. They immediately saw it as an attack on the Nord Stream 2 pipeline project that would bring Russian gas to Germany, Austria and other European countries. And they saw it for what it was; Germany and Austria immediately lashed out with a joint statement: “We cannot accept a threat of extraterritorial sanctions, illegal under international law, against European companies that participate in developing European energy supplies.”

 

They added sharply: “Europe’s energy supply is Europe’s business, not that of the United States of America.” and “The actual goal [of such sanctions] is to provide jobs for the US gas and oil industry...”

 

And there it is-- naked recognition that US anti-Russian acts are thinly concealed covers for US imperial goals. The US wants the European gas business currently done with Russia.

 

Lest anyone pretend that US imperialism-with-a-new-twist is strictly a product of Trump, it should be noted that the 98-2 Senate vote was no aberration. Writing in the Washington Post (6-8-17), David Gordon and Michael O’Hanlon-- two solidly connected Washington insiders-- pointed to “several hopeful signs” with Trump’s foreign policy. They lauded the President’s national security team and his stance in the Middle East. They were especially enthusiastic about his continued belligerence toward Russia.

 

The reckless foreign policy of the Trump administration still deviates occasionally from the ruling class consensus expressed in the editorial pages of The New York Times or The Washington Post. But more and more it is reckless because it conforms to that consensus. The endless wars and the escalation of those endless wars are not met with ruling class impatience, but appear to be more the new global norm.

 

The destabilization of countries and the promotion of sectarianism appear less as unintended consequences and more as those resulting from the deliberate, calculated tactics of an imperialist power benefiting from chaos.

 

As in the classic pre-World War I era of reckless imperialist competition, US imperialism is aggressively advancing its economic agenda against rivals, including recent “allies.” The dangers posed by these intensifying rivalries threaten to spark even more devastating clashes and widening wars.

Zoltan Zigedy

zoltanzigedy@gmail.com