Senate 110-6. January 10, 2007. Geopolitics of Oil. United States Senate Hearing. 90 pages.
General Charles Wald, U.S. Air Force (retired), Former Deputy Commander, U.S. European command, and member of the Energy Security Leadership Council
I recently retired from the Air Force after 35 years of service and during my career had the opportunity to fly combat over Vietnam, Cambodia, Iraq and Bosnia and learned much regarding how to use military assets to effectively solve national security problems.
But I also learned that many believed the U.S. military is solely responsible for security. I like to call this the ‘‘Dial 1-800-The-U.S.- Military’’ syndrome, because it reflects how people assume the U.S. military is a “toll-free” resource that can be called on to perform tasks that no one else has either the capability or will to execute.
I recall a recent meeting with several major global oil company executives in Kazakhstan. Before we began our discussion, one of the executives thanked me and the U.S. military for protecting the free flow of oil around the world. The executive’s world view included the expectation that the U.S. military will be there to provide worldwide security and to ensure the free flow of oil without any assistance from others. This struck me, and frankly, does not seem like a good model, particularly for the United States. The U.S. cannot and should not be everywhere to protect all the vulnerable components of the global oil infrastructure. The global economy relies on a massive oil infrastructure that stretches far beyond the Persian Gulf to pipelines in the Caucasus and offshore drilling rigs in the Gulf of Guinea. Surveying this situation, I realized that the U.S. military could not protect this vast infrastructure without partners. And, trust me, there should be partners out there, because the free flow of oil is in the best interest of many people all over the world.
With regard to the oil dependence issue, military response and capabilities are by no means the only effective tools available and in many cases are not appropriate. In fact, the single most effective step the United States can take to improve its energy security is to increase transportation efficiency. The transportation sector is responsible for nearly 70 percent of the oil the United States consumes. Within the transportation sector, oil—nearly 13 million barrels per day of it—accounts for 97% of delivered energy. More than 8 mb/d are used to fuel the over 220 million light-duty vehicles that Americans rely on for mobility.
CAFE standards legislated in 1973 during the Arab oil embargo were instrumental in helping America lower oil usage by the 1980’s, but there has been little progress since the original mileage targets were met. As a consequence, America’s light-duty vehicle fleet now has the worst average fuel efficiency in the developed world.
Some may be surprised to hear from a former General talk about fuel efficiency standards but they shouldn’t be. In the military, we learned that forced protection isn’t only about protecting weak spots, it’s also about reducing vulnerabilities before you go into harm’s way. That’s why lowering the Nation’s demand for oil is so critical.
Nearly all of our U.S. military commands have some oil security tasks and in essence they provide a blanket of security that benefits all nations. Central Command guards access to the oil supplies in the Middle East; Southern Command defends Colombia’s Cano Limon pipeline; Pacific Command patrols the tanker routes in the Indian Ocean, the South China Sea and the Western Pacific; and my last assignment, as deputy commander of European Command, which included, by the way, most of Africa. We patrolled the Mediterranean, provided security in the Caspian Sea and off the West Coast of Africa.
During that assignment, I became more appreciative of the size and scope of the oil security challenge. While surveying that challenge, it became apparent that the U.S. military could not protect that vast infrastructure without partners—and trust me, there should be partners in this mission. The free flow is clearly in the best interests of people all over the world. These interested parties certainly cannot replicate all the capabilities of the U.S. military, but their contributions can free up military tasks that only the U.S. military can successfully accomplish.
The armed forces of the United States have thus far been successful in fulfilling our energy security mission and they continue to carry out their duties professionally and with great courage. As a result of this success, many have come to believe—and I believe, falsely—that energy security can be achieved solely by military means. We need to change this paradigm because the U.S. military is not the best instrument for confronting all the strategic dangers emanating from oil dependence. The 1973 oil embargo is the most famous example of the use of energy as a political strategic weapon.
THE MILITARY’S HISTORICAL INVOLVEMENT IN ENERGY SECURITY
Since 1980, the U.S. Government, through military application, has put about $50 billion to $60 billion a year into the Persian Gulf. That doesn’t count the current Iraq war or the 1990 Iraq war. And that’s good for our country, for security interests, but the problem is, we’re subsidizing world energy. There is nobody else in the world doing this, and really, if you look at how much we’re paying per gallon, me, as a U.S. citizen today, for gasoline, you could almost say it’s $7 a gallon, based on the fact that we’re subsidizing world security on this issue.
The United States protects the global oil trade for the benefit of all nations. In part, this is because the U.S. has unmatched military capabilities. But another reason is that other nations know the U.S. military is out there doing the job.
The implicit strategic and tactical demands of protecting the global trade have been recognized by national security officials for decades, but it took the Carter Doctrine of 1980, proclaimed in response to the Soviet Union’s invasion of Afghanistan, to formalize this critical military commitment.
The Carter Doctrine committed the U.S. to defending the Persian Gulf against aggression by any ‘‘outside force.’’ President Reagan built on this foundation by creating a military command in the Gulf and ordering the U.S. Navy to protect Kuwaiti oil tankers during the Iran-Iraq War. The Gulf War of 1991, which saw the United States lead a coalition of nations in ousting Iraqi leader Saddam Hussein from Kuwait, was an expression of an implicit corollary of the Carter Doctrine: the U.S. would not allow Persian Gulf oil to be dominated by a radical regime—even an ‘inside force’ that posed a dangerous threat to the international order. More recently, the security agenda in the Gulf has expanded beyond state actor aggression to include concerns about terrorist attacks on facilities and supply lines.
Since issuing his 1996 ‘‘Declaration of War’’ against the U.S. and its partners, Osama bin Ladin has warned of attacks on oil installations in the Persian Gulf. Last year, the world came close to experiencing an oil supply shock when an Al- Qaeda attack on the Abqaiq facility through which approximately 60% of Saudi Arabian oil exports pass was barely foiled. In addition to attacking physical infrastructure, Al Qaeda operatives have also targeted expatriates in their residential areas, in particular in Riyadh, Saudi Arabia (October 2002) and in al-Khobar (May 2004).
Iraq is also the scene of persistent insurgent and terrorist attacks on pipelines and pumping stations, especially in the North of the country. These attacks have severely limited Iraqi oil exports to the Mediterranean through Turkey, and they are a major reason why Iraqi oil production has stubbornly remained below its prewar peak. The lost output has cost Iraq billions of dollars at a time when it needs every dollar and while U.S. taxpayers have spent billions on the reconstruction of the country. But if violence continues, and especially if it spreads to the south, where most of the oil and export facilities are located, then all of Iraq’s oil production could be at risk. The implications of this supply cut would be severe.
The danger of attacks on shipping is proven—in October 2002, the French supertanker Limburg was rammed by a small boat packed with explosives off the coast of Yemen. Most oil shipments have to pass through a handful of maritime chokepoints. Roughly 80% of Middle East oil exports pass through the Strait of Hormuz (17 mb/d), Bab el Mandeb (3 mb/d), or the Suez Canal/Sumed Pipeline (3.8 mb/d). Another 11.7 mb/d pass through the Straight of Malacca and 3.1 mb/d through the Turkish Straits. All of these passageways are vulnerable to accidents, piracy, and terrorism. Since alternative routes are lacking, the effect of a major blockage at one of these points could be devastating. Even unsuccessful attacks on tankers are likely to raise insurance rates and thus oil prices.
MILITARY POWER HAS LIMITS
The armed forces of the United States have been extraordinarily successful in fulfilling their energy security missions, and they continue to carry out their duties with great professionalism and courage. But, ironically, this very success may have weakened the nation’s strategic posture by allowing America’s political leaders and the American public to believe that energy security can be achieved by military means alone. We need to change the paradigm, because the U.S. military is not the best instrument for confronting all of the strategic dangers emanating from oil dependence. This is particularly true when oil is used a political weapon.
The 1973 Arab embargo is still the most famous example of the use of energy as a political strategic weapon. But in recent years, it has been Russia that has shown the most willingness to play this dangerous game, as at the beginning of 2006, when it stopped natural gas exports to the Ukraine, which in turn withheld the natural gas destined for Western Europe. The danger of conflict with a nuclear power like Russia should make it abundantly clear that there are limits on how we can use military power to guarantee energy flows. But we can take political steps to counter Russia’s brandishing oil and natural gas as political weapons. Russia wants to join the World Trade Organization (WTO) as a full member. Russia’s entry into this organization must be made contingent on its behavior. Russia must make a commitment to fostering energy security; there should be no reward for sowing insecurity.
Of course, energy exporting governments don’t need to resort to full-fledged embargoes to hurt the U.S. and other importers. Exporters can manipulate price through less drastic production cuts. Tellingly, after oil prices dropped from their 2006 peak of $78 to about $60 in the U.S. market, OPEC members began to cut back on production. Governments in oil-producing countries can also constrain future supply through investment decisions that lead to long-term stagnant or glowing growth in production and exports, or even decline. Often enough, future supply destruction is the unintended or accepted consequence of an insistence on government control of natural resources. Currently, an estimated 80-90% of global oil reserves are controlled by national oil companies (NOCs), which are highly susceptible to being constrained by political objectives, even if these undermine long-term supply growth.
State-controlled production is frequently inefficient, relying on outdated technology and reserve management techniques. Russia, whose government has made it abundantly clear that it wants to maintain near absolute control over its energy resources. This power grab has curtailed foreign investment, and ultimately limited production as well. Russia’s oil industry stands as a testament to the dangers of political meddling in oil production. After the collapse of the Soviet Union, Russian production plummeted to only 6 mb/d in the mid-1990s, but then the efforts of private companies helped push production back to over 9 mb/d, achieving 10% annual growth rates in 2003 and 2004.1 However, with the subsequent expropriations of private enterprises such as Yukos, the production growth curve has flattened. Government control over production in Russia will also adversely impact the massive Shtokman natural gas field and Sakhlain-2 oil projects. President Putin has determined that tight government control of resources is more important than the greater revenue that would accrue from increased production achieved through cooperation with Western oil companies.
In an oil-dependent world facing increasingly tight supplies, the growing power of oil exporting countries and the shift in strategic calculations of other important countries have all added up to lessen U.S. diplomatic leverage.
Iran, which exports to the United States’ European and Asian allies, has threatened the use of the oil weapon to retaliate against efforts to constrain their nuclear program. The European Union relies on Middle Eastern oil, and Russian gas continues to complicate U.S. foreign policy efforts, especially when considering our efforts to stop Iran from developing nuclear weapons. China, with its rapidly growing dependence on foreign oil also blocks U.S. diplomatic initiatives in an effort to strengthen its own ties with oil exporters.
Given all these factors, it is imperative that the United States make energy security a top strategic priority. Toward that end, we should mobilize and leverage all of our national security resources, including our economic power, our investment markets, our technological products and our unsurpassed military strength. Curtailing demand is the most important security step we can take.
We need a comprehensive national security strategy for energy security. We must be prepared for sudden supply shocks triggered by terrorism or politics. We must promote greater diversity of fuel options while improving the efficiency of our Nation’s fleet.
CAN. May 2009. Powering America’s Defense: Energy and the Risks to National Security. 74 pages. PoweringAmericasDefense.org
Retired Air Force General Chuck Wald wants to see major changes in how America produces and uses energy. He wants carbon emissions reduced to help stave off the destabilizing effects of climate change.
“We’ve always had to deal with unpredictable and diverse threats,” Gen. Wald said. “They’ve always been hard to judge, hard to gauge. Things that may seem innocuous become important. Things that seem small become big. Things that are far away can be felt close to home. Take the pirates off the African coast. To me, it’s surprising that pirates, today, would cause so much havoc. It’s a threat that comes out of nowhere, and it becomes a dangerous situation.
“I think climate change will give us more of these threats that come out of nowhere. It will be harder to predict them. A stable global climate is what shaped our civilizations. An unstable climate, which is what we’re creating now with global warming, will make for unstable civilizations. It will involve more surprises. It will involve more people needing to move or make huge changes in their lives. It pushes us into a period of nonlinear change. That is hugely destabilizing.
“Our hands are tied in many cases because we need something that others have. We need their oil.
He gives another reason for major changes in our energy policy: He wants to reduce the pressure on our military.
“My perception is that the world, in a general sense, has assumed the U.S. would ensure the flow of oil around the world,” Gen. Wald said. “It goes back to the Carter Doctrine. I remember seeing the picture of the five presidents in the Oval Office. [He referred to a January photo, taken just before President Obama assumed office. Most people would not guess it was Jimmy Carter who said the U.S. would protect the flow of Persian Gulf oil by any means necessary. But he did. He recognized it as a vital strategic resource.
“And since that time, as global demand has grown, we see oil used more and more often as a tool by foreign leaders. And that shapes where we send our military. You look at the amount of time we spend engaged, in one way or another, with oil producing countries, and it’s staggering. Hugo Chavez in Venezuela gets a lot of our attention because he has a lot of oil. We spend a lot of money and a lot of time focused on him, and on others like him.
Gen. Wald cautions against simplistic responses to the challenge of energy dependency.
“The problem is dependence, and by that I mean our hands are tied in many cases because we need something that others have. We need their oil. But the solution isn’t really independence. We’re not going to become truly independent of anything. None of this is that simple. Reaching for independence can lead us to unilateralism or isolationism, and neither of those would be good for the U.S. The answer involves a sort of interdependence. We need a diversity of supply, for us and for everybody. We need clean fuels that are affordable and readily available, to us and to everybody. That’s not independence. It might even be considered a form of dependency-but we’d be dependent on each other, not on fossil fuels.”