Uncle Sam’s Crude Solution


If Al Qaeda is serious about recent threats to strike at U.S. Economic interests, we could end up waging war on two—or even three—fronts, from the Middle East and Asia all the way to Latin America. That’s because, in our government’s view, U.S. interests start and end with oil.

Already, we have spent billions upon billions of dollars, and sacrificed no small number of lives, protecting supplies of crude in remote corners of the world. Though we lean heavily on stable sources like Canada, our biggest supplier, we’re also dependent on several volatile nations. Saudi Arabia tops that list, followed by Venezuela and Mexico. West Africa is a growing exporter, with Nigeria now our No. 5 provider. Despite continued sanctions, Iraq remains our sixth-biggest supplier.

Strong environmental opposition has made searching for supplemental barrels at home more difficult. And with no real national commitment to improving efficiency or developing renewable fuels, we have to look abroad. That means break out the guns and start writing checks—big, big checks.

When Saddam Hussein invaded Kuwait and threatened our flow of petroleum, we launched Desert Storm. Not counting the aftermath of personnel sickened by uranium-tipped missiles or the continued flyovers and bombing, that campaign cost $61.1 billion, of which U.S. taxpayers paid $23 billion.

With the war in Afghanistan—a nation key to the dream of Central Asian pipelines—winding down, U.S. troops are now stationed in Uzbekistan, Turkmenistan, and Georgia, at a price of something like $80,000 per soldier, per year. That expense comes on top of the $12.6 billion we spent getting rid of the Taliban and opening the way for oil to move through.

One figure, from the Sydney Morning Herald, tallies U.S. expenditures on troops and advisers in Central Asia at $200 billion. The real aim is to secure the region for more pipelines. American companies are involved in an enormous venture with the Chinese to build a pipeline more than 3000 miles long, stretching from the Caspian Sea to Shanghai; a second consortium would open a pipe from the Caspian to a Turkish port. The U.S. also has an interest in Russian oil rigs and pipelines. The war in Chechnya has left the Russians facing a constant specter of terrorists blowing up any network. Thus U.S. Special Forces stand by protectively in the former Soviet republics, while the meter runs.

When we’re not keeping rebels at bay, we’re making sticky deals with monarchs. The Saudis, for instance, use some of the wealth they gain from selling oil to us to buy American arms. Between 1998 and 2001, the U.S. transferred arms to the Saudis worth $12.8 billion.

Estimates are that the next Iraq war will cost between $20 billion and $30 billion. The U.S. will pay more, because Gulf allies like Saudis won’t be picking up the tab. The U.S. hopes to recoup this expense through the sale of Iraqi oil, currently worth $17 billion annually.

Here’s a look at the lengths our government and its shadow enforcers will go to in order to protect your local pump.

WEST AFRICA Anxious to diversify away from the Middle East, the U.S. has begun looking to oil from Gulf of Guinea nations like Nigeria, Angola, Gabon, and São Tomé. All of these countries are almost totally dependent on the export of oil to obtain stable foreign currencies.

The desperation on both sides has led to neo-colonial ugliness, with Shell Oil in particular facing unending local fury. Shell encouraged the Nigerian government to put a stop to the activist Ken Saro-Wiwa, who during the late 1990s organized protests against the company’s operations on Ogoni tribal lands. Nigerian officials arrested Saro-Wiwa, and eventually hanged him.

Painted as an international pariah, the company was forced to admit it had armed Nigeria’s ruthless mobile police—nicknamed the Kill and Go Mob—whose members killed 80 people in one village where Shell installations were being attacked.

Other costs are less clear. Through the CIA, the U.S. was quietly engaged for many years in the inconclusive civil war in Angola, and the hungry government of São Tomé looks forward to an American military base. São Tomé might take a lesson from what happened in Angola, our eighth-largest oil supplier. A settlement, signed on April 4, supposedly ended the 26-year conflict, but not before the country was left economically devastated and mourning the million people killed in fighting.

INDONESIA Already antsy oil and gas companies in Indonesia grew nervous after last week’s terrorist attacks. Indonesia is the world’s largest exporter of liquefied natural gas, with big customers in Taiwan, Japan, and South Korea. The economies of all three nations rely entirely on imported energy. Any cut in the supply lines could quickly turn catastrophic, with effects on the manufacture of goods sold to U.S. consumers.

ConocoPhillips, BP, Unocal, and ExxonMobil all have Indonesian interests. One export terminal was shut for five months last year following a separatist bombing that damaged the apparatus and caused ExxonMobil to pull out its staff.

American troops have not participated in Indonesia since 1999 because of that country’s human rights abuses in East Timor. But after 9-11, President Bush moved to increase military aid and relax restrictions on American military presence. A supplemental appropriations bill provided $16 million for the training of Indonesian police and $4 million for the military.

VENEZUELA This hemisphere’s established line to cheap crude, Venezuela has always been a bastion for the international oil companies. It’s our third largest supplier, so our interests there are regarded as a matter of paramount concern.

Evidence, though inconclusive, points to U.S. officials’ having fomented the abortive coup against Venezuelan president Hugo Chavez last April because they feared his populist politics. More to the point, as a recent head of OPEC, Chavez could direct the oil cartel from Bush’s backyard, although in recent months he’s been doing just the opposite—busting OPEC’s price levels to rake in dollars and help pay off Venezuela’s debt. Nonetheless, Washington has always dreaded the prospect of Venezuela linking up with Mexico inside OPEC.

COLOMBIA The U.S. has maneuvered itself smack into the middle of Colombia’s civil war, ostensibly with the goal of eradicating dope (an endless and futile effort), but also to protect an Occidental Oil pipeline that has been carrying increasing amounts of oil destined for the U.S. Local rebels have attacked this line 170 times, and last week struck again, disrupting operations.

Our answer to the war has been the $1.3 billion Plan Colombia, a program that got another $98 million early this year for protection of the Occidental works.

The Occidental pipeline made the news during the Clinton administration because Al Gore’s family had been a longtime holder of Occidental stock and the company contributed to Gore’s political campaigns, including his run for president.

CANADA AND MEXICO Buoyed by the North American Free Trade Agreement, the U.S. is steadily implementing a “continental policy” of draining more and more petroleum products from the huge storage bin in the Canadian north, while increasing our take from Mexico. In both places, big international oil companies call the shots.

When it comes to energy, Canada is a U.S. satrapy. American investment replaced British rule at the turn of the 20th century. By the 1970s, American companies controlled two-thirds of the fuel industry, including a good three-quarters of the petroleum-refining sector. A Standard Oil affiliate led the way. Americans owned the key long-distance oil pipeline, although the Canadian government at that time controlled the flow of natural gas.

Today, U.S. companies look forward to exploiting the oil-rich Mackenzie Delta, Arctic land encompassing parts of the Northwest Territories and the Yukon, and to harnessing Canada’s substantial hydroelectric resources for New York and other East Coast cities. What’s more, the industry is again considering a scheme to build a natural gas pipeline, costing billions of dollars, from Alaska through Canada down toward Chicago. Ripping up the Arctic means wholesale invasion of Inuit and other native people’s lands—but it also means filling up SUVs.

What we don’t get out of Canada’s privatized oil industry, we will suck out of Mexico. There the industry is controlled by a corrupt state company, but much of the oil and gas reserves are in the hands of American lessees. The idea is to gradually build up a network of pipelines leading into the southwestern U.S.

There’s also the issue of moving liquefied natural gas, or LNG. Because of the danger of enormous fires, most of the U.S. coastline is off limits to LNG tankers. Most recently, oil companies have come up with a plan to build an LNG terminal in Baja California. Gas from such places as Australia, Indonesia, and Latin America could enter there, then be transported by pipeline into the U.S., where the clean fuel is in keen demand for making electricity.

Additional research: Rebecca Winsor, Gabrielle Jackson, and Waris Rashaad Banks

The Latest