Oil 101809

The study of International affairs should be a study of interactive confluent, dynamic causations effecting international relations. Oil is a single causation but it is dynamic, and does interact with other factors effecting both domestic and foreign policies.

Oil (energy) most immediately interacts with business and government. The business dynamic is easily understood, let nothing get in the way of the bottom line. Whether it is the local gas station that jumps the price a buck a gallon at the threat of foul weather or Big Oil jumping its price 50 dollar a barrel on questionable justifications, it’s all about greater profit. The government’s motives are a great deal more complex. Governments must publicly face the hysteria and demands of their polity while negotiating behind closed doors with Big Oil. Somewhere lost in the dark bowels of government there is a pale, forgotten bureaucrat trying to craft a strategic vision for national energy policies.

Government policy is expediency and compromises until some disaster strikes then it become, scream and shout, run about. When the price of gas hits five dollars a gallon then the government grabs a scribbled note from the bureaucrat’s desk and claims it has the plan for energy security, and cheaper gas.

To understand the government and business complexity in energy policy a little history is necessary. In the public acclaimed trust busting days of the early 20th century the government broke up Standard Oil of New Jersey (1911). Ultimately the resulting three American companies formed a cartel with international oil companies that became known as the seven sisters. The cartel set prices and divided up oil production around the world. The world went into an economic nosedive in the 1930s that lasted until a world war demand for production and energy pulled the nose up. The end of the war however brought a new confluence of dynamics. Much of the world industrial capacity was destroyed, energy demands were down, while returning soldiers were demanding their own new deal.

Government, industry, Big Oil and public expectations became a confluent of dynamics. There was no grand conspiracy as there was no grand plan but there was conspiracy. Automobile giants could no longer profit from planes and tanks, the military market for petroleum was down, the government needed to prevent a new depression and the public wanted a freedom it felt it had earned. It was a mutual interest of government, industry and energy producers to not only pander to public demand but also drove its expectations. Oil and industry lobbied government for favorable legislation; governments built roads and suburbia as mass transit systems declined in an environment of personal auto transportation that allowed families to go when and where it wanted.

Today America fights pollution and competes over finite energy resources while trying to revive its mass transit systems. Emerging states look to the American experience as an ideal where everyone has a car and the freedom of the road. America however is a poor model in a world of increasing demand, global warming and antiquated energy production and utilization processes.

From a lecture