United States Foreign Oil Policy since World War I: For Profits and Security (review)

Updating his 1985 book, Stephen J. Randall traces the development of foreign oil policy in the United States from the First World War until shortly after President George W. Bush sent troops into Iraq to topple Saddam Hussein. Like most histories of relations between the United States government and private industry, this one presents a story of potential tensions between public and private interests. Randall demonstrates how complementary those interests often were, thus giving readers a solid understanding of the associational nature of the American political economy. In exchange for supporting growth of the petroleum industry, the government hoped to depend on the availability of a resource deemed essential to the nation's security.

Following the First World War, Americans worried about a likely oil shortage and the disastrous effects of competition with British and Dutch firms for known reserves. A review of oil policy led to a determination to seek equality of access for American firms to develop overseas reserves. This endeavour did not wholly succeed, yet did lead to the inclusion of United States companies in oil operations in the Dutch East Indies and Mesopotamia. In the latter instance, the Red Line agreement of 1928, which lasted for two decades, established a basis for accommodation between American and British firms. Neither private nor public efforts made similar headway in securing access to oilfields located in countries where nationalism was strong. This situation became problematic in the oil-producing states of the Western Hemisphere where the United States sought a hegemonic presence as a buffer against severe disruption of supplies from elsewhere. Contentious relations with Mexico over oil after 1917 demonstrated the difficulty of persuading others to adopt United States ideas concerning oil policy and security. As Randall rightly observes, United States policy was ill-considered, burdened by insularity.

Prior to the Second World War, few American officials understood the complexities of oil policy as well as secretary of the interior Harold Ickes, who would serve as petroleum co-ordinator during the war. Government engagement with oil policy during and after the war, a legacy of Ickes's prodding, made oil firms part of the nation's security apparatus. Attempts to reach formal agreements with allies about access and production failed. The link between oil dependency and security soon manifested itself, however, in the Middle East in Iran and the Arabian Peninsula. Oil policy during the Eisenhower years did not deviate substantially from prior efforts to meet security needs in concert with allies and to ensure profits for major oil companies. That convergence of public and private interests helps to explain the Anglo-American intervention in Iran in 1953.

Interests of the United States government and private oil companies diverged after the early years of the Cold War as stirrings of nationalism and the rise of opec made access to oil less certain. Crisis was averted until 1973. Following the October War and the subsequent rise in prices, the United States remained heavily dependant upon foreign oil. Multinational companies refused to challenge opec and accepted greater involvement in the oil business by producer states. The traditional business-government quest for profits and security was no longer conducted within a framework worked out among interest groups in Washington or with allied states. One of the curious by-products of radical nationalism in the oilfields was domestic antipathy to government control of energy policy in the Reagan years. Unbridled demand threatened price stability and gave voice to calls in Republican circles to shut down the Department of Energy. Two wars in the Persian Gulf since 1990 and the persistence of oil nationalism in Latin America have done nothing to restore order to United States energy and foreign oil policy. Randall ends his account with a cautionary note about the burgeoning appetite for oil in China; he might also have mentioned India.

This useful book is not without flaws. The unchanged detail of the...