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Editor’s Note: I had hoped to provide here an excerpt from a chapter I have written for an edited collection on Transatlantic Energy Security, “A Brief History of Transatlantic Energy Security Relations: The Pursuit of Balance and Stability through Interdependence,” by Tammy Nemeth in Transatlantic Energy Relations: Convergence or Divergence? (Routledge, 2013), editors Karen Smith Stegen and John R. Deni. Available for pre-order: http://www.taylorandfrancis.com/books/details/9780415834193/. However, after a great deal of time and discussion with the publishers, they have decided at this time not to permit the on-line publishing of an excerpt. Since I cannot write a detailed overview at this time that will not borrow from this piece I must direct readers to David Painter’s excellent overview, “Oil and the American Century” in the 2012 special issue of the Journal of American History (http://www.journalofamericanhistory.org/issues/991/#articles.) His detailed overview emphasizes some of the key events in the US, Europe, and the Middle East over the past 100 years and is well worth reading as a background to the papers that will be discussed here on the list. What follows here then is a *brief* overview designed to emphasize some of the key events in the US, Europe, and the Middle East that led up to the 1973 oil price shock or energy crisis, and to provide a bit of context to the contributions that will follow from other authors. Given the limited amount of space here and the time people have to read these articles, I have tried to keep it brief. That being said, there are certain to be events and issues that other scholars and the informed public might see as missing from the discussion. If that is the case, do not hesitate to write in with your comments! While I have tried to keep the endnotes to a minimum, I have found that historians always want more sources, and statements cited. Therefore, I am also posting in another email a working and open bibliography of sources used for this overview. The list is open for additions and will be posted to the list archive. If there is a work that you believe ought to be considered, please submit it to the list and it will be added to the bibliography. BRIEF HISTORICAL CONTEXTUAL OVERVIEW Perhaps two of the most telling aspects of the post-war petroleum order, as highlighted by Dr. Painter’s and my own article are the phenomenal increase in global petroleum consumption between 1945 and the present, with the most accelerated increase taking place in the period up to 1973; and the decline in US productive capacity and the failure of its ability to be the swing supplier in a time of emergency. Without the significant increase in global consumption, it doubled during the 1960s, and the decline in American production, the supply interruptions and changes to the pricing structure that created such turmoil in the early 1970s would not have had the same impact. At the same time that US reserves and production declined, the Soviet Union saw its oil and gas production increase. During the 1960s American State Department officials termed the increase in Soviet petroleum trade with Western Europe as the “Soviet Oil Offensive”. This caused great concern within successive US Presidential Administrations as there was a great fear that Western Europe would become dependent on Soviet supplies and therefore be vulnerable to supply disruptions as a prelude to war.  While the various European countries involved recognized the potential threat, they sought to downplay the dependence and argued that they were diversifying their supply so as to be less dependent on Middle Eastern oil, with a limit or cap of approximately 10 percent of consumption on the amount of petroleum traded with the Soviet Union, though this amount slowly began to creep up during the 1970s.  Another aspect of the increase in Soviet oil production was how it upset the balance in the global oil supply. During the 1950s oil and gas were being discovered around the world and there was a significant glut of oil on the world market which led to a drop in prices. For the most part, prices in the non-Communist world during this period were determined by the companies. When the companies reduced the posted prices, on which the producing countries calculated their royalties, the companies did so unilaterally. Producing countries, particularly those in the Middle East, were incensed and, led by Venezuela, decided to form the Organization of Petroleum Exporting Countries (OPEC) in 1960, with the goal of working together to ensure consultation between producers and companies on price changes, and eventually develop a system to stabilize prices through the regulation of production.  OPEC took several years to become adequately organized and for the participating countries to agree and act on principles. While the Arab members of OPEC attempted an oil embargo to the US and Western Europe in 1967 during the Six Day War, it was largely ineffective because of the coordinated efforts of the countries affected and the international companies that produced and moved the oil. During this crisis, the United States exerted strong leadership within the OECD oil committee despite European hesitation and inaction. Consequently, the OPEC countries became more focused and in 1968, OPEC issued a “Declaratory Statement of Petroleum Policy,” that included, among other things, provisions for producer government participation in the ownership of concession companies, that producer governments would establish the posted prices, and that better conservation practices be implemented in the development of the fields.  Initially, the proposals did not translate into action until the Libyan coup in 1969. Taking advantage of the global situation where the Suez canal continued to be closed, there were not enough supertankers to transport oil to Europe, and pipeline difficulties from Saudi Arabia to the Mediterranean, Libya now led by Colonel Muammar Qaddafi, demanded increased prices from the companies or all production would be stopped. The main company operating in Libya was Occidental Petroleum, an American independent, and it could not absorb revenue losses from the cessation of production. Occidental asked the major companies to aid in any shortfall so that it would not accede to Libya’s demands and set a precedent for other producing countries, but the majors refused and Occidental paid the higher price. This was the beginning of the end of company control and influence over pricing, not just in the Middle East but in oil producing nations around the world including South America and Africa, and set in motion a chain of events that contributed to a fundamental restructuring of the international petroleum order. Before 1970/1971, international prices were set and maintained by arrangements made mostly between the seven major oil companies and the host countries. Between 1960 and 1970 the posted price remained relatively constant at $1.80/barrel. The pricing structure began to change after the Libyan demands were acceded to, and subsequent price spirals ensued between 1971 and 1973. For example, in 1973 prices doubled to $3.29/barrel, then just days before the Yom Kippur War OPEC announced a unilateral increase to $5.12/barrel; by the end of 1973 it had increased prices to $11.58/barrel. Although moderate price increases began in the years immediately preceding the Yom Kippur War, instability in the Middle East and conflict with Israel caused prices to skyrocket.  Another major turning point that contributed to the energy crisis was the changes to the balance of power in the Middle East region that affected its stability. First, there was the long-standing visceral abhorrence of the creation of Israel by its neighbours and other Arab and Islamic countries such as Saudi Arabia. The various failed attempts to defeat Israel, such as the 1948/1949 war, the Suez Crisis, the 1967 Six Day War, and finally the 1973 Yom Kippur War, fueled the turmoil in the region as much as the continued US support for Israel. In the Cold War context the turmoil was intensified as the Soviet Union tended to support the countries fighting Israel, thus an added threat that regional strife could escalate into direct confrontation between the US and the Soviet Union. The main force of stability in the region was the United Kingdom (UK), even though the US had a presence in the Middle East since the end of World War 2. As the UK’s power diminished and eroded, fear of a power vacuum ensued. Eventually the UK told the US Administration of Richard Nixon that it would be withdrawing all of its troops stationed east of Suez by the end of 1971. The US sought an alternative regional balance of power to ensure stability as part of the larger Nixon Doctrine -- local powers must be responsible for maintaining stability in their regions with minimal US support. From this came the “Two Pillar” strategy with Iran as the primary military force for stability, and Saudi Arabia as the second pillar to assume America’s role of global swing producer.  Consequently, Iran and Saudi Arabia greatly increased their weapons purchases, and gained significant prestige in the region and within OPEC. However, the stability that Nixon and the world hoped for was fleeting. Saudi Arabia had been trusted as the new global swing supplier but that trust was betrayed when, through its membership in the Organization of Arab Petroleum Exporting Countries (OAPEC), it joined in an oil embargo against the US, the Netherlands, and Portugal during the Yom Kippur War in October 1973. OAPEC was created in 1968 and was originally intended to be a conservative organization with founding members Saudi Arabia, Kuwait, and Libya. It became more radical in 1972 when Egypt, Syria, Algeria, and Iraq were admitted. Since Egypt and Syria were involved in the attack against Israel in 1973, OAPEC was used to assist their efforts to defeat Israel by using oil as a weapon to discourage Western support of Israel. The oil embargo and utilization of oil as a weapon was successful this time for a number of reasons, even though the goal of defeating Israel failed. Since consumption had increased significantly, modern industrial societies were more vulnerable to supply shortages. Western nations, particularly Western Europe, the United States, Canada, and Japan, were dependent on oil imports (some countries more than others). The United States had become a net importer and could no longer be the global swing supplier. The companies no longer controlled the prices, and soon they no longer controlled production as nationalizations swept through producing countries – 16 new state companies formed out of nationalizations between 1973 and 1981.  While prices began to rise in 1970/1971, they spiraled out of control in 1973. Unlike crises in 1950, 1956, and 1967 there was little coordination among the Western countries. The institutional arrangements that existed and had worked in the past were under-utilized as individual nations such as France, West Germany, and Japan sought to make bilateral deals with producing countries so as not to antagonize Arab producers, despite American entreaties to work together.  Ultimately, a new consumer organization was created, the International Energy Agency (IEA), to help coordinate the response of consumer countries to the actions of producing countries. The IEA became the place where the consuming countries shared information and experiences about differing strategies for facing the new international petroleum order, including ways to conserve energy, reduce consumption, and increase exploration and production in areas outside of OPEC. Where the 1950s and 1960s were a period of relative price and supply stability punctuated by the occasional crisis, and consumption increased at an enormous pace, the 1970s seemed to be a period of perpetual crisis. Before 1971 prices were established by the companies, afterwards the collective action of the producing countries set prices. The Cold War struggle between the Soviet Union and the United States added an extra dimension of tension and affected international oil supplies. The Soviet Union overwhelmed the international market and put downward pressure on prices, which exasperated relations between companies and Middle Eastern producers. The crises in the Middle East before 1973 were dealt with by international cooperation between countries and companies; whereas such cooperation was limited and in some cases ineffective during the 1973 crisis. Alterations in the consumption, supply, and pricing patterns of global petroleum came together in 1973 with the growing collective influence of producing countries, decline in company influence, Cold War struggles, turmoil between countries in the Middle East and changes in the balance of power in that region, to create a fundamental restructuring of the international petroleum and energy order. ENDNOTES  Sometimes it was also referred to as the “Soviet Economic Offensive.” For an example of State Department assessments see, FRUS, 1958–1960 Volume IV, Foreign Economic Policy, Document 313, Letter From the Chief of Naval Operations (Burke) to the President’s Special Assistant for National Security Affairs (Gray), November 19, 1960, http://history.state.gov/historicaldocuments/frus1958-60v04/d313 [last accessed 15 February 2013]; FRUS, 1961-1963 Volume V, Soviet Union, Document 307 Memorandum by the Ambassador at Large (Thompson), March 25, 1963, http://www.state.gov/www/about_state/history/vol_v/300_309.html [last accessed 15 February 2013]. See also, Bruce Jentleson, Pipeline Politics: The Complex Political Economy of East-West Trade (Ithaca: Cornell University Press, 1986), Daniel Yergin, The Prize (New York: Touchstone, 1992), 515; Nathan Citino, From Arab Nationalism to OPEC (Bloomington: Indiana University Press, 2010) 2nd Edition, 151; Fiona Venn, The Oil Crisis (London: Pearson, 2002), 41.  Peter Odell, Oil and World Power (New York: Penguin Books, 1979), 58-59.  Francisco Parra, Oil Politics: A Modern History of Petroleum (London: I.B. Tauris, 2012), 99.  Andrew Scott Cooper, The Oil Kings: How the US, Iran, and Saudi Arabia Changed the Balance of Power in the Middle East (New York: Simon & Schuster, 2012), 37. Michael A. Palmer, Guardians of the Gulf (New York: Simon & Schuster, 1992), 89. See also Little, American Orientalism, Douglas Little, American Orientalism: the United States and the Middle East Since 1945 (Chapel Hill: UNC Press, 2008) 3rd Edition, 137-146. Little makes a compelling case that the two pillars strategy had been pursued to some degree by both the Kennedy and Johnson administrations. See also, Jeffrey R. Macris, The Politics and Security of the Gulf: Anglo-American Hegemony and the Shaping of a Region (New York: Routledge, 2010), 175-206; Cooper, Oil Kings, 43-44. Palmer, Guardians of the Gulf, 87-96, disagrees with Little and argues that the military build-up of Iran and Saudi Arabia reversed the previous policy trend of rejecting military build ups in the region. For numerous documents relating to the American decision to embrace the “twin pillar” strategy see, FRUS 1969–76, vol. 24, and document 91 National Security Decision Memorandum 92 November 7, 1970, in particular. http://history.state.gov/historicaldocuments/frus1969-76v24/d91 [last accessed 22 February 2013].  Fiona Venn, “International Co–operation versus National Self–interest: The United States and Europe during the 1973–1974 Oil Crisis,” in The United States and the European Alliance since 1945, ed. Kathleen Burk and Melvyn Stokes (New York: Berg, 1999), 72, 79.  Parra, Oil Politics, 110-113. See also, Venn, The Oil Crisis, 38.  Venn, The Oil Crisis,39; Little, American Orientalism, 68; Parra, Oil Politics, 150-160; Robert Orttung, Jeronim Perovic, Andreas Wenger “The Changing International Energy System and its Implications for Cooperation in International Politics,” in Energy and the Transformation of International Relations, ed. Andreas Wenger, Robert Orttung, Jeronim Perovic (Oxford: Oxford University Press, 2009), 6-7.  For detailed accounts of consumer and producer actions see, Venn, The Oil Crisis, 113-143; and Venn, “International Co–operation versus National Self–interest.” For prices, supply, and consumption statistics see, BP Statistical Review of World Energy, 2012. www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2011/STAGING/local_assets/spreadsheets/statistical_review_of_world_energy_full_report_2012.xlsx [last accessed, 16 February 2013]. --