The Petrostate Secretary

The Petrostate Secretary

Rex Tillerson’s confirmation as Secretary of State threatens a return to a foreign policy driven by the pursuit of oil, whatever the human and environmental cost.

The confirmation of ExxonMobil CEO Rex Tillerson as Secretary of State does not bode well for the climate—and, in turn, for the future of our species. Where the Obama administration made at least modest efforts to emphasize conservation, efficiency, and the increased use of renewable energy, Tillerson’s tenure threatens a return to a policy of seeking to increase oil supplies whatever the human and environmental cost.

Under Tillerson’s predecessor, Lee Raymond, ExxonMobil suppressed climate change research by its own scientists and funded climate change denial groups. When he took the helm in 2005, Tillerson softened the company’s public position on climate change and even suggested a willingness to accept a carbon tax, as long as it did not affect ExxonMobil’s core business of oil and gas production. But he continued to work with any regime, whatever its political, human rights, or environmental record, that lets the company operate with security and make a healthy profit.

While Tillerson’s appointment marks the first time the head of a major oil company has directly taken one of the highest offices in the U.S. government, the policy goals he is likely to pursue are hardly unprecedented. The history of U.S. foreign oil policy shows that whatever big oil wants, it usually gets.

Access to the black gold first emerged as an important national issue following the First World War. The growing importance of oil to modern industrial society and modern warfare and the desire of U.S. companies for new sources of supply convinced government officials to help U.S.-based firms gain and maintain access to great producing areas in Latin America, the Middle East, and elsewhere. The U.S. government got actively involved in maintaining the stability of pro-Western regimes with large petroleum reserves. This meant backing both democratic and authoritarian governments in Venezuela. But in the Middle East, the United States worked mainly with monarchies—in Saudi Arabia, Kuwait, Iran, Iraq, and Libya. In 1953, U.S. and British intelligence orchestrated the overthrow of Iran’s elected government, reversed the nationalization of the Iranian oil industry, and helped the shah establish a royal dictatorship. The progress Iran had been making toward representative government and freedom from foreign interference was abruptly halted.

What happened to Iran served as a warning to countries that might challenge international oil companies and their U.S. sponsors. As a result, the postwar oil regime flourished in the 1950s and 1960s. By 1973, oil accounted for 45 percent of U.S. energy consumption, 59 percent of West European energy consumption and 75 percent of Japanese energy consumption—up from 32 percent, 8 percent, and 11 percent, respectively, in 1938.

In that same year, however, both the United States and the big oil companies received a shock. When the United States decided to send arms to Israel during the Arab-Israeli War, the Organization of Arab Petroleum Exporting Countries (OAPEC) imposed an embargo on shipments to the United States and the Netherlands and reduced shipments to other countries, depending on their position in the Middle East conflict. Western oil companies respected the embargo, while undercutting its political purpose by shifting non-Arab oil to the embargoed countries. Although Iran and other non-Arab OPEC members did not join the protest, they were quite happy to accept the sharp price increases that resulted from it.

After the withdrawal of British military forces from the region in late 1971, the United States had looked to the shah’s Iran to take over the British role as guardian of Western interests in the Persian Gulf. Higher oil prices led to a sharp increase in Iranian oil revenues, spurring extravagant military spending, inflation, massive rural-urban migration, corruption, and increases in already sharp inequalities in wealth and income. Along with the weapons systems the shah bought, mostly from the United States, came thousands of Western technicians and military advisers. This inflamed fears of corrosive Western influence among Iran’s conservative clerics and swelled opposition to the regime.

In 1978, a decline in real oil prices and decreases in government spending caused an economic crisis and sparked widespread demonstrations against the monarchy. By the time the Carter administration realized what was happening, it was too late to save the shah, who fled Iran in January 1979. The turmoil surrounding the Iranian Revolution disrupted oil supplies and markets and led to a further doubling of oil prices.

The next important chapters in the story of big oil and U.S. policy also took place in the Persian Gulf. Maintaining access to the huge reserves there was a key objective of the U.S.-led war to reverse Iraq’s August 1990 invasion of Kuwait. Iraq’s takeover of Kuwait gave Saddam Hussein control, altogether, of around 20 percent of the world’s petroleum reserves. If Iraq had also seized the oil fields in Saudi Arabia, it would have controlled close to half of global reserves.

Despite vehement denials by officials in the second Bush administration, it is clear that concerns about oil also played a role in the U.S. invasion of Iraq in March 2003. U.S. policymakers believed that overthrowing Saddam Hussein would neutralize the Iraqi threat to the security of the Persian Gulf and open the country up to foreign investment. Iraq had huge, underdeveloped oil reserves, and increasing its production would moderate prices and lessen U.S. dependence on Saudi Arabia. The resulting debacle dashed these expectations.

In this century, increased production at home through hydraulic fracturing and horizontal drilling has reduced the need for imports. The United States still gets around a quarter of its oil from abroad, however, and most U.S. allies and the world economy in general still depend on oil imports, especially from the Middle East. So U.S. policymakers continue to focus on gaining access to oil in other parts of the world. In most cases, they have to deal with state-owned oil companies that control almost 80 percent of world oil reserves. Their other alternative, in addition to fracking, is to develop fields in difficult environments such as deep offshore or in the Arctic.

There are problems with all three strategies. Disposing of the large amounts of polluted water used in fracking raises environmental and health concerns and has been linked to a sharp increase in earthquakes in Oklahoma—not to mention a spike in global emissions of methane, a potent greenhouse gas, since 2002. Despite significant technological advances, deep offshore oil is difficult and expensive to develop and can be environmentally destructive, as demonstrated by the 2010 Deepwater Horizon disaster; these risks are only compounded in the Arctic. Making deals with oil-producing countries in the Middle East, Central Asia, and West Africa—as well as with Russia, as Tillerson’s ExxonMobil has been particularly eager to do—often involves alliances with regimes that deny their citizens basic political and civil rights and/or are quite corrupt. Nor do these alliances guarantee stability: although oil revenues can provide repressive regimes with the resources to crush or coopt dissent, the chessboard of geopolitics make some degree of conflict inevitable.

While increasing supply can lower prices, lower prices reduce the incentive to conserve oil and develop alternatives. A focus on increasing supply also ignores the environmental consequences of oil production, transportation, refining, and consumption. Oil production and such petrochemical products as benzene contribute significantly to environmental degradation and health hazards. Fossil fuel combustion puts far more carbon dioxide into the atmosphere than the world’s oceans, soils, and biomass can absorb, fueling a rise in global temperature levels unprecedented in human history. With 2016 confirmed as the third year in a row to break global temperature records, many scientists are expressing concern that major disruptions from climate change, including catastrophic levels of sea level rise, could be approaching much faster than predicted.

In short, dependence on oil has become a strategic liability and an environmental disaster. Increased domestic production may lower the economic costs of importing oil, but the human costs of maintaining access to the Persian Gulf and other producing areas—not to mention burning fossil fuels in general—show no signs of decreasing.

The most important question facing the United States in regard to oil in the twenty-first century is not how to ensure access to oil to meet increasing demand, but rather how to move away from what is clearly an unsustainable and dangerous path. With Donald Trump and his new Secretary of State eager to send us hurtling down that path at even greater speed, it will be up to us to determine how to steer the country—and world—in a more sustainable direction.

David S. Painter teaches international history at Georgetown University.