Oil and Sovereignty

Petroknowledge and Energy Policy in the United States and Western Europe during the 1970s

Rüdiger Graf

• Publisher: Berghahn Books
• Year: 2018
• ISBN:
  9781785338076
• Edition: 1
• Topic: History
• Subtopic: 20th Century History
• Index: History

In the decades that followed World War II, cheap and plentiful oil helped to fuel rapid economic growth, ensure political stability, and reinforce the legitimacy of liberal democracies. Yet waves of price increases and the use of the so-called "oil weapon" by a group of Arab oil-producing countries in the early 1970s demonstrated the West's dependence on this vital resource and its vulnerability to economic volatility and political conflicts. Oil and Sovereignty analyzes the national and international strategies that American and European governments formulated to restructure the world of oil and deal with the era's disruptions. It shows how a variety of different actors combined diplomacy, knowledge creation, economic restructuring, and public relations in their attempts to impose stability and reassert national sovereignty.

Chapter 1

THE WORLD OF OIL IN THE 1950S AND 1960S

Oil Abundance and Western Society

Human societies have always transformed the energy stored in their environment in pursuit of various objectives. Since the 1970s, this has tempted anthropologists and historians to construct entire civilizational histories in terms of energy use.¹ Fundamentally impossible though it may be to explain economic, political and social developments solely with reference to a society’s energy system, we can distinguish a number of energy regimes in light of the energy sources dominant in economy and society. For thousands of years, human societies had mainly used renewables such as wood, water and wind, but the Industrial Revolution changed this fundamentally through the increased use of fossil energy sources. The burning of coal and oil produced unprecedented quantities of energy, facilitating processes of economic expansion and growth as well as engendering novel forms of settlement and social organization.² Coal was the energy source for the steam engine and thus the primary fuel of the nineteenth century, but it was increasingly overtaken by oil over the course of the twentieth century. The steam engine was superseded by the combustion engine and gas turbine as leading technologies, and these enabled a new intensity of global economic exchange and, as a result, stimulated an ever greater demand for oil.³ The key period of expansion in the use of oil and thus in the oil industry itself came after the Second World War: ‘The numbers – oil production, reserves, consumption – all pointed to one thing: bigger and bigger scale. In every aspect the oil industry became elephantine’,⁴ as Daniel Yergin concluded in his award-winning history of oil. This remains true in the early twenty-first century. In 2012, petroleum was central to the activities of eight of the world’s ten richest companies.⁵

Some figures can help bring out the spectacular growth in the oil economy in the twentieth century. In 1900, around 21 million tonnes of oil were being produced in twelve countries; in 1965 it was 1,505 million tonnes in fifty-four countries.⁶ Between 1949 and 1972, in other words during the postwar economic boom, global energy use tripled, and oil made up the largest share of this increase. In the United States, where the oil economy had already been far advanced before the war, oil use tripled and in Western Europe it increased fifteen times over.⁷ Between 1920 and 1960, oil and gas as a share of total energy use increased from 17.7 to 73 per cent in the United States, and in the postwar era the countries of Western Europe recapitulated this shift to varying degrees.⁸ Coal still played a major role in the economic reconstruction of the postwar period, but towards the end of the 1950s the economic parameters shifted in favour of oil, which became cheaper in real terms and especially in comparison to coal.⁹ From the mid 1950s until 1972, coal as a share of total energy production in Western Europe sank from around 75 to 22 per cent, while in the same period oil’s share increased from around 23 to 60 per cent.¹⁰ In France, almost all the rapid increases in energy use of the 1960s were based on the growing consumption of oil, and in West Germany too, during the same period, oil overtook coal as the most important primary energy source. In 1957, oil still made up only 11 per cent of the West German energy supply, but this had grown to more than 55 per cent by 1973.¹¹ The economic boom in Western Europe during the first few postwar decades was based on energy-intensive industries whose growth was facilitated by an abundance of cheap energy. While this did not trigger processes of economic growth in Western Europe, Japan and the United States, it undoubtedly fuelled them.¹²

In the second half of the twentieth century, due to its many practical advantages over coal, oil became the leading energy source in Western Europe, the United States and Japan. First, per unit of weight, oil provides almost one and a half times as much combustion energy as coal.¹³ Second, due to its liquid state, it is easier to extract and transport, giving rise to more flexible structures of transportation. While the transportation routes of coal start off thick and culminate in branches, those of oil look more like a decentralized web.¹⁴ Third, in the 1950s, its less labour-intensive extraction not only made oil cheaper than coal, but also reduced the influence of workers and unions on energy production.¹⁵ Finally, oil burns more cleanly than coal, so in view of mounting concerns about air pollution in the 1960s, oil’s relative environment-friendliness was another argument in its favour.¹⁶ Nonetheless, oil’s rise to dominance was no natural necessity. It required economic and political decisions.¹⁷ The financial aid provided by the Marshall Plan, for example, facilitated the first steps towards the expansion of the oil economy in Western Europe. Ten per cent of European Recovery Program (ERP) funds were spent on oil – more than for any other commodity – and ERP money thus paid for more than half the oil delivered by US firms to Marshall Plan countries between 1948 and 1951, securing an important market for the American oil industry.¹⁸ In Japan, it was not until 1959–60 that the government decided to shift the Japanese economy away from expensive indigenous coal towards cheaper imported oil, triggering accelerated economic growth.¹⁹

The expansion of the oil economy led to massive social changes in Western Europe and the United States while at the same time being propelled by them. As economic growth produced increased prosperity for broad swathes of society in the first three decades after the Second World War, oil products largely determined the forms taken by this increasing affluence.²⁰ The number of automobiles in the United States increased from 45 million in 1949 to 119 million in 1972. In the rest of the world, the increase was from just under 19 to 161 million over the same period.²¹ Automobilization altered patterns of residence, living and work, and in the 1950s and 1960s, the ‘car-friendly city’ became a core paradigm of urban planning. In the United States in particular, the rise of the car inaugurated a trend towards suburbanization that created residential structures in which the car was indispensable. In 1946, there were eight shopping centres in the United States but more than twenty thousand in 1980, the site of two-thirds of all retail sales.²² This development did not occur on the same scale in Western Europe but here too – though later and with regional differences – supermarkets and shopping centres proliferated that were easiest to reach by car.²³ Very similar patterns pertained to the equipping of private households with technological appliances, which massively increased their need for electricity. In the United States, from 1920 to 1970, the demand for electricity doubled roughly every decade and – in addition to the car – the washing machine, television, dishwasher, air conditioner and other appliances were soon among the standard fittings of an increasing number of households.²⁴

Cars, electric household appliances and thus an ever more energyintensive lifestyle increasingly defined the character of modern existence and were central to the so-called ‘American Way of Life’. Over the course of the twentieth century, energy and electrical appliances played a crucial role at the world exhibitions – and well beyond them. In the Western European countries, exhibitions featuring American household appliances quite consciously sought to get Europeans excited about the American lifestyle.²⁵ Rather than a private matter, in the Cold War context energyintensive consumption was highly politicized, as evident in the famous Kitchen Debate between US vice president Richard Nixon and Nikita S. Khrushchev on the occasion of an American exhibition in Moscow in 1959.²⁶ One of the key issues thrown up by the competition between communism and capitalism was which system was better suited to providing the general population with consumer goods. In light of their surging economic growth, the Western democracies and market economies held out the prospect of equally rapid increases in prosperity, and their ability to convince people of their superiority increasingly depended on their capacity to meet the expectations they had raised. In this context, oil not only played a key role as provider of energy in the form of heating oil, petrol and electricity, but also as the feedstock of the chemical industry, which supplied countless products that defined the world of consumption and goods in the second half of the twentieth century.²⁷ Even agriculture was fundamentally transformed by oil, because mechanization facilitated the cultivation of larger areas by a smaller number of people. These areas could, moreover, be farmed more intensively through the use of oil-based artificial fertilizers.²⁸

In view of the crucial significance of oil in so many fields of twentieth-century economic and social life, it may seem reasonable to refer to a ‘century of oil’. From this perspective, at least in the postwar era, Western societies appear to have become ‘hydrocarbon societies’, and the average citizen ‘hydrocarbon man’:

Today we are so dependent on oil, and oil is so embedded in our daily doings, that we hardly stop to comprehend its pervasive significance. It is oil that makes possible where we live, how we live, how we commute to work, how we travel – even where we conduct our courtships. It is the lifeblood of suburban communities. Oil (and natural gas) are the essential components in the fertilizer on which world agriculture depends; oil makes it possible to transport food to the totally non-self-sufficient megacities of the world. Oil also provides the plastics and chemicals that are the bricks and mortar of contemporary civilization, a civilization that would collapse if the world’s oil wells suddenly went dry.²⁹

The metaphor of oil as the ‘lifeblood of modern economies’, also used by Yergin, has long been particularly suggestive. This is due in large part to the fluid physical state common to both. The analogy crops up again, from an opposing perspective, in the slogan ‘no blood for oil’.³⁰ But the suggestive rhetoric must not be allowed to gloss over the reductionism inherent in statements such as Yergin’s, quoted above, in which one aspect of society – albeit an important one – becomes a metonym for society as a whole.³¹ The world of the 1950s and 1960s was much more than just a world of oil and cannot be reduced to the trade in oil, but it was still partly a world of oil. How was this world structured? Who created and organized it? And which knowledge systems developed around it in the postwar period?

Global Structures of the Oil Economy

Petroleum is a fluid mix of various carbohydrates, which may also contain nitrogen, oxygen and sulphur compounds, and is found in subterranean deposits of porous rock. Drilling into these oil reservoirs causes the oil to rise to the surface as a result of the pressure in the deposit, or alternatively it may be extracted through mechanical procedures.³² Petroleum deposits are distributed unequally across the world and the difficulty of exploiting them depends on geographical position, depth and soil composition. To a limited degree, oil that had risen to the surface of the earth without human intervention was used for millennia for various purposes, but commercial oil production began in the United States in the second half of the nineteenth century. The oil industry is generally considered to have come into existence when Edwin L. Drake drilled the first successful well for the Seneca Oil Company in Titusville, Pennsylvania in 1859, triggering the first oil boom. The United States thus became the homeland of the oil industry. In every year between 1903 and 1962, it produced more than half the oil extracted worldwide. It remained the largest producing country until the mid 1970s and the largest consumer of oil during the entire twentieth century.

Though the use of oil was essentially limited to lamp oil and lubricants before the invention of the combustion engine, the oil industry developed rapidly. It was initially dominated by John D. Rockefeller’s Standard Oil Company, which was broken up into a number of smaller regional firms in 1911 as a result of the Sherman Antitrust Act. Of these, Standard Oil of New Jersey (later Exxon), Standard Oil ...

Table of contents

• Cover
• Title Page
• Copyright Page
• Contents
• List of Illustrations
• Acknowledgements
• Abbreviations
• Introduction Sovereignty and Petro-Knowledge
• Chapter 1 The World of Oil in the 1950s and 1960s
• Chapter 2 Shortages, Forecasts, Prevention: Supplying the Western World with Oil
• Chapter 3 The Global Communication of the ‘Arab Oil Weapon’
• Chapter 4 The Politics of Sovereignty in the Energy Crisis: The United States
• Chapter 5 West Germany within the World of Oil
• Chapter 6 Oil Conferences: Global Interdependence and National Sovereignty
• Chapter 7 Petro-Knowledge, the Perception of Limits and Sovereignty: Creating the Oil Crisis
• Conclusion Sovereignty in Crisis and the Oil Crisis in Contemporary History
• Bibliography
• Index