Modern society is dependent on oil. Without it, industry would come to a halt. How vulnerable is the Western World? What could an oil shortage mean for the economy?
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For over half a century, American citizens have been accustomed to traveling freely by automobile, with minimal impact to the family budget. The automobile has evolved into an American expression of personal wealth, independence and freedom. More importantly, it has become a critical part of the domestic economy. Most Americans drive daily to and from work, spending a significant portion of their income on cars, trucks, parts, service and fuel. Thus, the automotive industry is a leading indicator of the health of the economy.
Gasoline has been a relatively inexpensive commodity in the United States for over 100 years. But recently, the price of gasoline exceeded $2 per gallon—with some experts expecting this to increase throughout the summer. With control of the world supply of crude oil largely in the hands of nations increasingly hostile to the U.S., many recognize that the long era of cheap energy may be over.
Just how dependent is the U.S. on foreign crude oil? What is the cause of such a rapid increase in the price at the pump? What does this mean for you and your family?
Use of the automobile has, more than any other factor, encouraged the massive consumption of petroleum. Conceptions of the automobile can be dated to roughly 500 years ago, as its possibilities were considered by Leonardo da Vinci. However, actual production has a much shorter history. One of the first gasoline-powered automobiles was produced in 1886 by the German company Daimler. Yet, in America, the concept has evolved from simple designs at the turn of the 20th century, to the sophisticated, computerized marvels of today.
The freedom enjoyed by U.S. citizens contributed to the assumption that personal transportation was more a right than a privilege. The turn of the last century saw the United States become, by far, the world’s greatest producer of petroleum. America remained the top producer of crude oil until a few years prior to World War II. But imports began to exceed exports in 1948. However, net production continued to increase in the lower 48 states until it peaked sometime in 1970, and it has been declining since that time (except for a brief period between 1984 and 1985). Alaskan crude temporarily made up for this decline, but peaked in 1988, and has since fallen around 30 percent.
During this period, the U.S. has become increasingly dependent on foreign crude oil. Imports increased around 40 percent between 1973 and 1996, with net imports of oil at 46 percent and climbing. Today, the United States is much more dependent upon imports than in 1973, when the nation experienced a short-lived disruption in supply. The Middle East holds enormous power to disrupt world oil supply because of its massive petroleum reserves.
Even if personal travel were all that was at stake, these developments would be enough to cause grave concern. However, oil is also the fuel of commerce, as commodities and manufactured goods are transported entirely by trains, trucks, planes and ships.
Additionally, and perhaps most critically, oil remains the most important source of energy used in modern warfare, powering most ships, planes, tanks, and transport vehicles. In short, the war-making capacity and effective defense of any modern nation requires an abundant and ready supply of oil. Should the United States be concerned, Strategic Petroleum Reserves notwithstanding? Just how important is oil to the survival of a modern nation?
Germany is a country blessed with human ingenuity, but with limited natural resources. During his quest to establish a German “1,000-year Reich,” Adolf Hitler recognized the value of petroleum in modern warfare when he attacked Romania, seeking to secure its abundant oil fields.
The German Reich also recognized the importance of controlling the huge petroleum reserves in the Middle East—and moved energetically early in the war to achieve this objective.
Many do not realize that some Arab nations were solidly aligned with Germany during World War II. Along with the Germans, they generally worked to defeat the English- and American-led Allied Forces, until it became clear that the Allies would ultimately be victorious. These Arab nations then moved to make deals with the Allies. Their national proclivities have changed little today.
Hitler’s quest to control Middle Eastern crude oil ended with the defeat of his tactical genius, General Erwin Rommel, at Alamein, in North Africa. With Egypt secure, Britain and America were able to effectively retain control of critical Middle Eastern oil reserves.
Most will agree that conservation and proper management of our natural resources is prudent and wise—but that those resources should not remain untapped, and rendered essentially useless.
We should certainly strive to protect the water we drink, the land we live on, and the air we breathe. Effective management of renewable resources such as timber and wildlife also has long-term benefits. However, the ongoing battle today between industry and environmentalists—with each failing to take a balanced approach that would consider both sides of the issue—has each faction essentially focusing on their own agenda, without consideration for the overall implications that this issue presents for everyone.
Karl Marx regarded the masses as ignorant, knowing that populations could be fooled and used to be unwitting participants in a socialist movement. He coined the derogatory term “useful idiot” to describe such people. It seems that western culture has set out to prove Marx’s statement. For example, when oil prices increase rapidly, many invariably find it convenient to blame American oil companies, along with their executives, rather than groups that have worked against exploration and development of domestic reserves.
The ongoing conflict between these groups has resulted in the delaying or canceling of various projects through any means (such as The Protected Species Act, or Clean Air Act) that would enhance the wealth and quality of the nation as a whole. One such example is the blocking of the development of the Arctic National Wildlife Refuge, which prevents the U.S. from tapping its oil resources.
Has this damaged America’s ability to produce its own energy? Absolutely. Has it contributed to reduced security in the nations of the West? Unequivocally.
While we would all appreciate technological advancement that would reduce our nation’s dependence upon hydrocarbon-based fuel, all indicators are that petroleum will remain the main source of energy as long as the present economic system exists.
Many have come to accept that the U.S. must ultimately be dependent on foreign oil. Because of its political position and historically natural support of the tiny nation-state of Israel, the U.S. government has had to adopt an increasingly inconsistent foreign policy in regard to the Middle East.
While the overall sympathies of the United States continue to gravitate somewhat toward Israel, increased dependence on foreign oil and cultural drift have compelled a morally weak nation to also accommodate the enemies of this young nation. The power wielded by Arab nations has been an important consideration in U.S. foreign policy for decades.
The U.S. government, aware of oil’s importance to the U.S. economy and the perceived power of the masses, must express policy and strategy in carefully prepared terms to avoid offending an increasingly hostile domestic population. The Arab nations are becoming more aware of this growing weakness and disunity, and could ultimately challenge U.S. resolve in a big way once again. One could surmise that the enemies of the U.S. sense that a unilateral response by the United States, even in self-defense, would not occur, because of the mass hysteria it would invoke domestically!
In short, the diverse conglomerate of America naïvely assumes that Arab desires and objectives are similar to those of the western developed world and should be provided equal consideration.
The current President has even gone so far as to entertain Muslim Imams in the White House to appease both foreign and American Arabs. Though well-meaning, this form of political correctness results in over-sensitivity toward civilian casualties and religious insult, which usually paralyzes the U.S. military from using the force necessary to destroy their enemy. The true God warned that the modern nations of ancient Israel would not use effective force: “And I will break the pride of your power” (Lev. 26:19). It is likely that the fallout from the present Iraqi conflict has only begun.
Saudi Arabia, a pro-West Arab country, accounts for about 10% of the world’s total crude oil production. Even more importantly, this 8-million-barrel-per-day (BPD) production can, in a crisis, be increased overnight to 11 million BPD. In short, Saudi Arabia is a critical linchpin to the western economy.
The House of Saud, protected by the United States since World War II in exchange for acting as a world oil supply stabilizer, has come under increasing internal attacks from radical Muslim factions that want to topple the government. Many believe they could soon achieve their objective.
Combine this with the chaotic situation in Iraq, along with generally growing confidence and hostility of most other Arab nations, and one can see that events could spiral quickly out of control, affecting many nations! Will the governments of the West be able to summon the collective will required to pursue war, which it perceives as its only option? And is this the only option? These problems could be solved if men would obey God.
Americans now view the world narrowly through secular eyes and can no longer comprehend or believe supernatural grand design and destiny, as their forefathers once did when the nation was being constructed. “Manifest destiny”—a phrase of national confidence, coined by James Monroe, acknowledged the supernatural birthright legitimacy of the United States and its incredible expansion and control. However, today, any hint of religion when assigning America’s place in history is viewed as contemptible—perceived by many as a racist and imperialist past that cannot be forgotten quickly enough.
The average U.S. citizen seems to willfully ignore common displays of Arab and Muslim hatred of America and Britain—such as the mass celebrations that followed the destruction of the World Trade Center in New York—refusing to believe that all but the most moderate in the Arab world would similarly rejoice at any future massively destructive acts! Combine the intense religious hatred, with jealousy of the blessed American and British nations, the growing impotence of the West, along with the dependence upon a commodity largely controlled by this region, and one can easily conclude that someday, perhaps very soon, oil will be used as a weapon against the Western World.
As discussed above, the United States is vulnerable to a disruption in the supply of foreign oil. However, the U.S. does not appear at first glance to be as exposed to the actions of the Arab world as Europe or Japan. Only 17% of imported U.S. crude oil, for example, moves through the Persian Gulf, while European dependence upon Middle Eastern crude stands at about 29%, with 75% of the oil bound for Japan passing this direction.
While the U.S. might not appear to be as susceptible to shocks caused by events in the Middle East, it may be, in reality, more vulnerable than continental Europe or Japan because of its massive trade deficit.
The established world trading routes for crude oil have evolved largely because of the logistics of transport. In other words, it makes much more economic sense for Middle Eastern crude to be shipped to nearby European ports for use, than faraway America; while Latin American crude will find the least costly route to North America.
For example, if an interruption of crude oil exports from the Middle East (presently around one-half of world production) occurred, Europe and Japan’s demand for oil would not go away. World pricing would be determined by world supply and demand—not just demand in the United States, as available resources would be transported to those willing and able to pay the highest market price. With the U.S. trade deficit putting tremendous downward pressure upon the dollar, and European and Japanese trade surpluses providing additional cash in the form of Euros and Yen, it is plain that the total available supply would tend to move in the direction of Europe and Asia first. The U.S. could find itself isolated, very alone, and very thirsty for crude oil—very fast!
The Western World, in many ways, finds itself ensnared by the impulsive and unpredictable nature of the Arab world. Where is this leading? Will the Arab nations use oil in an attempt to dominate the earth? Will their religion expand until it overwhelms all regions of the world?
Bible prophecy clearly presents the final sequence of events, in which the Middle East is key. But, their role may not be what you think.
Events in the Middle East will, indeed, act as triggers to the great cataclysm at the end of this age! Oil will very likely be used as a weapon, but the Arab nations will, once again, overestimate their power, and underestimate the strong reaction that will ensue.
The hostile use of oil by Middle Eastern nations will almost certainly galvanize the “clay” and “iron” (Dan. 2:33) of the rising beast power in Europe, as the Arab nations could likely be the catalyst for the final sequence of apocalyptic events at the end of this age. (To learn more about this beast power, read our free booklet Who or What Is the Beast of Revelation?) However, they have not been given the power to achieve victory for themselves. Only the one true God of the universe gives and removes such power!
The conflict of greatest consequence will not be fought between the Middle East and the Western World. In the near future, a historically familiar political-religious assembly of European nations will arise to once again use its terrible war-making capacity to destroy and enslave nations (Isa. 10:5-7).
This brief war will astonish many—God intends to use it to correct His sinning people. Once He has humbled them, He will use them to lead humanity in total world peace! To understand why such events are coming upon America and Britain, read the Personal in this issue, “The Greatest Nations in Prophecy.”