America's energy weapon
For the third time in seven years, a Middle Eastern crisis has dramatized the energy threat to our security. As we search for solutions, there ar five important pitfalls to avoid.
The United States in isolation. Even if we reduce our reliance on oil imports, we will remain vulnerable through military and economic interdependence with allies who are less able to reduce their own vulnerability. Switching to Western Hemisphere sources -- one commonly touted solution to the energy crisis -- one commonly touted solution to the energy crisis -- would not solve th US energy security problem properly defined, because in time of emergency the United States would be committed under an International Energy Agency agreement to share the oil remaining after interruption.
If we broke the agreement, our allies would feel a greater need to bid higher prices for the remaining uninterrupted oil in world trade. the net effect would be higher economic costs to all involved plus foreign policy costs of alliance disarry. Working with out allies is essential to energy security.
Equating imports and vulnerability. Too often US rhetoric and attention have focused on reducing imports to the exclusion of other measures. Energy security cannot be measurd only in terms of imports.
In the case of most commodities, dependence on world prices is partially offset by diversification of supply sources and maintenance of stockpiles. The degree of vulnerability depends not only on the level of imports but also on the other instruments and policies available. The larger the insurance policy, the higher the tolerable level of risk. Stockpiles and robust emergency procedures are the key.
The confusion of time scale. Oil is the heart of the energy security problem and will remain so well into the decade. Too often disputes about energy policy have confused differnt time horizons. Energy security problems can be considered in the short term (less than two years); the mid-ter (2-10 years); and the long term (beyond a decade).
Synthetic, nuclear, and solar programs have long lead times and solve very few short-term and mid-ter energy security problems. It is estimated that the ambitious US synthetic fuels program will meet less than 6 percent of US oil consumption by 1990. With respect to nuclear power, even if US and Japanese programs were to proceed as now planned, they would provide were about 10 percent of total primary energy needs in each country by 1990. Only the French nuclear program is far enough along to meet 20 percent of France's energy needs by 1985.
This does not mean that efforts to create long-ter supply alternatives are irrelevant to energy security. On the contrary, they indicate some eventual limits to oil price increases. These limits, in turn, have some moderating effects on current prices by influencing arguments inside OPEC nations about the value of keeping oil in the ground. However, for short-tun interruptions, billions of dollars invested in synthetics ar worth less than millions invested in stockpiles.
Neglecting security of supply. Too often over the past decade US policy focused on preventing prices rises to the extent of ignoring the effect on security of supply. Diplomatic efforts were designed to persuade Persian Gulf states to produce more oil and to moderate OPEC prices.
This strategy only made the United States more dependent on Persian Gulf oil. Price and security considerations can work in opposite directions, and sometimes higher prices must be accepted for security purposes. Some actions that raise prices -- for example, filling the strategic reserve -- also increase security. Another effect of higher prices is increased conservation.
This is not to say that high oil prices are unimportant. But the largest price increases were precipitated by the 1973 and 1979 supply interruptions. A sensible policy should seek price moderation, but the prime focus should be on the dangers of interruptions.
Military ventures. A final pitfall is the temptation to imagine there is an easy solution through military takeover of Persian Gulf oil fields. The political and economic costs of such an attempt would be extremely high.
First, the risk of destroying the oil infrastructure through fighting or sabotage could create a several hundred-billion-dollar disruption that an energy security policy is supposed to avert. Second, there is little prospect for developing interational legitimacy for what will be characterized as a new colonial occupation, which would result in disruptions of American foreign policy in other regions.
Third, unless the situation approaches what Henry kissinger termed "strangulation," it is uncertain how much public support would be maintained for American occupation of oil fields, particularly if less questionable alternatives such as demand restraint had not been implemented first. How many lives spent ar worth how many minutes in gasoline lines saved?
Of course, an enhanced defense posture in the Middle East is a good energy investment. An ability to deter Soviet intervention and to help protect quickly those who ask for US assistance provides important assets in the complex diplomacy of oil. But force is not a sufficient energy strategy. Our security also depends on cooperation with allied consumers and a serious energy policy at home.