America’s oil weapon
In July 1941, after Japan occupied French Indochina, the Roosevelt administration froze Japan’s assets in the U.S. Denied hard cash, Japan could not buy the U.S. oil upon which the empire depended.
Seeing the Dutch East Indies as her only other source, Japan prepared to invade. But first she had to eliminate the sole strategic threat to her occupation of the East Indies — the U.S. battle fleet at Pearl Harbor. FDR’s cutoff of oil to Japan was thus a primary cause of WWII in the Pacific.
A second use of the oil weapon came in 1973. Arab members of OPEC imposed an embargo in retaliation for Nixon’s rescue of Israel with an airlift in the Yom Kippur war. Long gas lines helped to bring Nixon down.
Now the oil weapon appears to be back in America’s hand.
Due to the substitution of natural gas for oil in heating homes and buildings, horizontal drilling and hydraulic fracking, U.S. production has exploded. We now produce more oil than Saudi Arabia.
Cuba excepted, there is no more hostile regime in Latin America than that of Venezuela’s Nicolas Maduro. Oil accounts for 95 percent of his nation’s exports. Iran is almost wholly dependent upon oil sales for hard currency. Russia is the oil and gas supplier for much of Europe.
With the price of oil having fallen from over $100 a barrel to below $80 this week, all three nations are suffering plunges in revenue. The United States and Europe are also punishing Russia and Iran with sanctions on their energy sectors.
As the oil weapon was used by us against Imperial Japan and by the Saudis against us, we are now wielding this sword.
We should remember that it is double-edged.
The Saudis have continued to pump as the price has fallen. What is Riyadh’s game? Are the Saudis out to cripple us with an oil glut?
Today, not only are Iran and Iraq producing below potential, so, too, is Libya. And we have been bombing ISIS’ oil facilities in Syria. A contrarian’s question: Would we not be better off if these countries not only restored oil production, but also expanded production and put more oil on the market than they do today?
Demand creates supply, and a world oil market where there is more supply than demand would seem to be to America’s benefit. For we remain the world’s largest consumer of petroleum products.
And surely it is to our benefit to enlarge both the reserves and production of oil and gas in North America.
In “America’s New Oil Weapon” in National Review, Arthur Herman of the Hudson Institute urges the U.S. to take bold steps to increase supplies of oil and gas: relax the rules on drilling in Alaska’s Arctic National Wildlife Refuge; use as an economic weapon against OPEC the 700 million barrels in the Strategic Petroleum Reserve; allow the export of U.S. oil to enable us to cope with OPEC cutbacks; and build the Keystone XL pipeline.
What Herman is urging is a new nationalism, a new way of thinking about international economics that puts the U.S. and its allies first and uses our economic leverage to advance national rather than global interests.
Something the GOP Congress might think about when Barack Obama asks it to surrender its right to amend trade treaties with fast track.
Pat Buchanan is the author of the new book “The Greatest Comeback: How Richard Nixon Rose From Defeat to Create the New Majority.”