Energy Independence

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Energy Independence American National Security

• Can the United States De-fund
• the House of Saud?

Joshua Montgomery Chicago-Kent College of Law
Spring 2007 joshmontgomery_at_hotmail.com
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Within the title are two assumptions

• Assumption 1 American dependency on foreign oil
  is harmful, particularly, because it threatens
  the national security of the US.

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Assumption 2 A well-funded Saudi Arabia is a
danger to the national security of the United
States.
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These assumptions prompt two important questions

• Question 1 If the US becomes an energy
  independent nation, or at least largely so, will
  Saudi Arabia be substantively de-funded?

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Question 2 Would a de-funded Saudi Arabia be a
positive development in the national security of
the US?

• Note Question 2 is not a corollary to Assumption
  2.
• It is possible that Saudi Arabia is a threat to
  American national security regardless of whether
  it is well funded or de-funded.

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Assumption 1 American dependency on foreign oil
is harmful, particularly, because it threatens
our national security.

• What harms stem from a dependency on foreign oil?

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One opinion There are no harms.

• Not everyone agrees that it is dependency that
  causes harm, just the way that the dependency is
  managed.
• One proponent of this position is the Reason
  Foundation, a libertarian think tank.

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Reason Foundation Position

• America should become more not less
  dependent on foreign oil. In fact, the best way
  for America to defuse the so-called Middle
  Eastern oil weapon is by purchasing even more oil
  from the region.
• Our dependence is the flip side of their
  dependence. We can leverage our oil purchases to
  control rouge states behavior.

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The Majority Opinion America is addicted to
oil

• Since the 1973 oil embargo, 24 of the 34 State of
  the Union addresses have proposed solutions to
  our energy problem.
• The result? In 1973 the US imported 34.8 percent
  of its oil. Today it imports just over 60 percent.

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American Energy Security Declaration of Energy
Independence

• It will provide stability at the gas pump.
• It will protect the environment.
• It will facilitate industrial development.
• It will eliminate the trade and budget deficits.
• It will create more than a million jobs.
• It will foster new technologies.
• As of May 2007 this declaration was signed by the
  governors of 9 states.

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National Security and US Oil Dependency

• McCain In many parts of the world where we are
  dependent upon our oil supply there's either
  instability or challenges. So I think it is a
  national-security argument to reduce our
  dependency on importing oil.
• Hillary Clinton Our dependence on foreign oil
  threatens our economy and hamstrings our national
  security.

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The Saudi Arabia Connection Its how they spend
their money

• Over the last three decades, Islamic extremism
  and violence have been funded from two countries,
  Saudi Arabia and Iran, not coincidentally the
  world's first and second largest oil exporters.
• Newsweek 2005

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Assumption 2 A well-funded Saudi Arabia is a
threat to the national security of the US

• As a core tenet of its foreign policy, Saudi
  Arabia funds the global propagation of Wahabism.
• Saudi Arabia has been the single biggest source
  of funding for fanatical interpretations of
  Islam, and the embodiment of that interpretation
  in organizations and schools has created a
  self-perpetuating institutional basis for
  promoting fanaticism across the Muslim world.

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Saudi Arabia Human Trafficking

• Saudi Arabia is a destination country for workers
  from Southern Asia who are subjected to
  conditions that constitute involuntary servitude
  including being subjected to physical and sexual
  abuse, non-payment of wages, confinement, and
  withholding of passports as a restriction on
  their movement
• Tier 3 - Saudi Arabia does not fully comply with
  the minimum standards for the elimination of
  trafficking and is not making significant efforts
  to do so

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Saudi Arabia Womens Rights

• Women in Saudi Arabia who walk unaccompanied, or
  are in the company of a man who is neither their
  husband nor a close relative, are at risk of
  arrest on suspicion of prostitution or other
  "moral" offences.
• A woman's testimony does not carry the same
  weight as that of a man. In a Shari'a court, the
  testimony of one man equals that of two women.
• Women cannot speak in family law courts.

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Criminal Law in Saudi Arabia

• The Government executed persons for criminal
  offenses after closed trials in which forced
  confessions are common and few procedural
  safeguards are provided.
• Sentencing is not uniformunder Shari'a as
  interpreted and applied in Saudi Arabia, crimes
  against Muslims receive harsher penalties than
  those against non-Muslims.

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Question 1 If the US becomes more energy
independent will Saudi Arabia be substantively
de-funded?

• Saudi Arabia is the leading oil exporter.
• The United States is the leading oil consumer.
• At first glance the answer to this appears to be
  yes.

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U.S. Consumption, Production, and Imports of Oil,
19492005
Source EIA Annual Energy Review 2005.
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US Petroleum Imports from Saudi Arabia(Thousand
Barrels per Day)

• 1973 Average ........................486
• 1975 Average ........................715
• 1980 Average .....................1,261
• 1985 Average ........................168
• 1990 Average .....................1,339
• 1995 Average .....................1,344
• 1996 Average .....................1,363
• 1997 Average .....................1,407
• 1998 Average .....................1,491
• 1999 Average .....................1,478
• 2000 Average .....................1,572
• 2001 Average .....................1,662
• 2002 Average .....................1,552
• 2003 Average .....................1,774
• 2004 Average .....................1,558

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De-funding hardly seems possible.

• Demand side Saudi Arabia is a minority share of
  American market
• Supply side American purchases are only a
  fraction of the Saudi Arabian market
• Note This is one reason why the libertarian idea
  of consumer control is ineffective and
  unrealizable.

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It only gets worse.

• Dwindling supply
• US oil production is low
• Saudi Arabian oil fields may be dwindling
• New measurements are not being allowed
• Increasing number of wells are being built and
  capacity is remaining the same ? wells arent
  producing the amounts they were before
• Running at capacity? No one knows

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If the supply is dwindling.

• Scarcity drives up the price
• No new (easily accessible) fields are being
  discovered
• Pessimism about expected supply
• Companies are less likely to devote huge sums of
  money to get the oil
• Race to the oil is unlikely prohibitive costs
  are to high
• The result Saudi Arabia stays well-funded from
  its high priced remaining oil supplies

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The other end of the tunnel?

• If Saudi Arabias supply is not dwindling
• Emerging markets
• China India
• Their growth is expected to more than surpass any
  amount that the US can realistically cut
• Saudi Arabia can control a majority of the supply
  side of the world oil market

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Foreign Investments

• Saudi Arabia is encouraging foreign investments
• Increasing ownership of foreign assets
• Largest shareholder of Citibank is Prince Al
  Waleed

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Question 2 Is a de-funded Saudi Arabia good for
US national security?
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Some Pros

• International spread of Wahabist Islam will
  certainly be decreased.
• Human trafficking in Saudi Arabia would decrease
  because the flow of immigrant workers would
  cease.
• A bankrupt Monarchy would almost certainly
  collapse.

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Some Cons

• Saudi Arabia could cash in its chips and it
  has a lot of chips (investments in foreign
  markets).
• If the monarchy collapsed a new regime could
  always be worse
• Although it is doubtful that they would wield the
  same influence as Saudi Arabia does now.
• Americas Military Industrial complex would
  suffer.

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Conclusions

• America is dependent on foreign oil, but most of
  this oil does not come from the Middle East.
• This makes it nearly impossible to de-fund Saudi
  Arabia directly.
• But the US should contribute as little as
  possible to hostile/radical regimes
• Energy independence is still in US national
  security interests.
• Independence means the economy wouldnt be
  subject to the whims of foreign governments via
  the oil market.