- How Much Does Oil Shape US Strategic Interests in the Middle East?
The 1973 oil embargo was a devastating event for the West and particularly for the international oil companies, or IOCs, headquartered in the United States and Great Britain. The embargo and the near-simultaneous oil sector nationalizations—all rooted in collusion by the member states of the Organization of the Petroleum Exporting Countries (OPEC)—produced at least six major outcomes. Control of global oil passed from Western IOCs to national oil companies (NOCs) in the developing world. The 85 percent share that IOCs controlled in 1970 plummeted to just 12 percent by 1980. The split in oil revenues underwent a similar inversion. By 1975, producer governments were getting 85 percent of the take, which, alongside the quadrupling of oil prices, brought breathtaking increases in income. As I related in my 2019 book, Saudi oil revenues jumped 40-fold between 1965 and 1975, from $655 million to $26.7 billion.1
Suddenly, these lowly commodity exporters found themselves wielding geopolitical power based on their commanding influence over the global economy. They were autocracies then, and as Michael Ross pointed out, most of the governments that nationalized their oil in the 1970s used that income to resist the various democratic waves.2 Most remain staunchly autocratic today. Meanwhile, the rest of the world scurried to reduce its exposure to expensive oil, particularly from the Middle East. Big investments in exploration, diversification, and conservation grew out of the embargo and its 1970s oil shock twin, the Iranian Revolution.
The embargo's hangover is still with us. Because of it, Japan and France are civil nuclear powers, and the US is grappling to retire a slew of polluting coal plants. The IOCs that were kicked out of the developing world—including BP, Exxon, Mobil, and Chevron—stayed alive by venturing into the frozen wastes of Alaska, to deepwater offshore, and by providing marketing and engineering services for the upstart NOCs that took their concessions.
So, imagine my surprise when reading in two recent books that the 1973 embargo was a nonevent. Robert Vitalis, in Oilcraft, argues that the 1973 embargo "is best understood as [End Page 157] political theater whose effects on untargeted audiences—Westerners and Arab citizens (or subjects)—were psychological" (p. 63). This claim is easily refuted. Beyond the events above, simply recall the emergence of the locking gas cap, a timely invention that became necessary to safeguard one's gasoline from siphon-bearing thieves seeking to avoid getting in line for high-priced fuel.
Vitalis's argument centers around two of the least important outcomes attributed to the embargo. Yes, American gasoline shortages— and queuing at filling stations—were not direct effects of the embargo but of US price controls, import quotas, and tight market conditions (although OPEC was partly responsible for those conditions). And yes, the actual "embargo" part of the embargo, the ban on exporting oil to the United States and the Netherlands, was undone by the liquidity of the oil market. Even in the 1970s, oil cargoes could be redirected. No mention of the bigger picture.
Oilcraft is organized around a contrarian premise that aims to puncture established wisdom about the supreme geopolitical importance of oil. Some of this is certainly deserved. Vitalis provides us a service by calling into question many long-held suppositions. But the author boxes himself in by challenging nearly every conventional understanding of the strategic history of oil. The title Oilcraft illustrates this approach. Like witchcraft, oil's strategic primacy is a fiction that is supposed to disintegrate under close examination. If only.
In Black Gold and Blackmail, Rosemary Kelanic also downplays the 1973 embargo but...