Whither the Carter Doctrine? Reassessing U.S. Energy Interests in the Middle East
America’s relationship with Middle East energy resources is changing. Technological breakthroughs in hydraulic fracturing (or “fracking”), renewed drilling in ultra-deep waters in the Gulf of Mexico and, soon, drilling in the Arctic Circle are re-energizing U.S. domestic petroleum production and shrinking the demand for foreign petroleum imports. Meanwhile, oil and natural gas production in the Americas — from Canada in the North, to Brazil and Colombia in the South — are beginning to displace U.S. reliance on Middle East oil. These emerging energy trends will affect America’s relationship with the Middle East in important ways. But do not expect a fundamental shift in U.S. foreign policy in the region any time soon.
The Carter Doctrine and U.S. Energy Interests in the Middle East
The United States has had historical concerns about assured access to Middle East petroleum resources that have shaped U.S. involvement in the region. President Jimmy Carter famously declared in his 1980 State of the Union address that the United States reserved the right to use force to protect the flow of petroleum from the Middle East to the United States: “An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force.”
Although U.S. interests in the Middle East have become more complex since the Carter administration – to include concerns about violent extremism, human rights abuse and nuclear proliferation – it has become almost axiomatic to say that U.S. involvement in the Middle East has been tied solely to concerns about securing access to the region’s petroleum resources. Whether or not one buys that, the perception that U.S. interests in the Middle East are tied solely to concerns about energy supplies raises some questions about whether the United States will lose interest in the Middle East as it becomes less reliant on energy imports from the region.
In years past, U.S. dependence on petroleum imports (particularly in the Middle East) sharpened concerns about assured access to energy – that is, concerns that, despite the price of oil, U.S. contracts would be met so long as U.S. consumers were willing to pay the price. In 2005, U.S. dependence on oil imports peaked, accounting for more than 60 percent of total U.S. oil consumption, with about 25 percent of all U.S. oil coming from the Middle East. As a result, U.S. policymakers have had concerns about security developments in the Middle East that could affect oil shipments from the region and severely impact the U.S economy. A closure of the Persian Gulf’s strategic choke point, the Strait of Hormuz, or an attack by violent extremists or a hostile government on the region’s critical oil and natural gas infrastructure are among some of the scenarios that U.S. policymakers have been particularly concerned with.
The Changing Energy Landscape – New Production, New Suppliers
The United States is becoming less reliant on foreign oil imports, especially from the Middle East. In 2010, U.S. petroleum consumption was for the first time in many decades provided largely from domestic production. According to the U.S. Energy Information Agency (EIA), U.S. petroleum production from domestic resources of oil and natural gas satisfied approximately 51 percent of demand that year. Moreover, increased production of shale gas and offshore oil, as well as declining U.S. fuel consumption is expected to improve the balance between domestic production and foreign oil imports. For example, by 2025, the EIA estimates that the United States will satisfy more than 60 percent of its petroleum demand from domestic resources. Meanwhile, increased production of oil in the Americas (outside the United States) will gradually shrink America’s reliance on Middle East oil. For example, Canada, already America’s number one supplier of foreign oil, is expected to sharply increase production from tar sands that will provide additional volume for U.S. consumers.
These developments will have positive benefits for U.S. concerns about assured access to energy resources from the Middle East. New suppliers of foreign oil imports in the Americas are increasingly viewed as being less vulnerable to major supply disruptions and less likely to use their resources as leverage over the United States (except perhaps for Venezuela, which is no longer a significant exporter of oil to the United States).
Nevertheless, the United States will still have enduring interest in stability and security in the Middle East, especially with the region’s energy resources. Besides keeping a watchful eye on Syria’s uprising and Iran’s nuclear weapons program, the United States will have a stake in ensuring that the Middle East’s energy resources remain uninterrupted due to concerns that disruptions in oil shipments could drive up global energy prices. This changing relationship with Middle East energy, in simple terms, is one of moving from concerns about assured access to the region’s petroleum resources to concerns about the region’s role in ensuring affordable petroleum.
Indeed, concerns about high oil prices, particularly their impact on gasoline prices, and the knock-on effects for the U.S. economy will give the United States a continued stake in the region. Gasoline accounts for approximately 66 percent of total U.S. oil consumption, tying gasoline and global oil prices closely together. Higher gasoline prices can stifle U.S. economic growth by diverting Americans’ spending toward transportation costs and away from other important sectors. And there is no simple fix to this challenge. Efforts to diversify gasoline mixtures have hit a plateau for the foreseeable future. Ethanol, for example, will likely continue to be blended up to 15 percent of gasoline mixtures but no more due to the corrosive effects that ethanol can have on U.S. pipeline infrastructure and automobile engines. Meanwhile, the market penetration of Natural Gas Liquid vehicles will likely remain stagnant given the infrastructure challenges associated with scaling up this technology. Of course, technological improvements in vehicle fuel efficiency will help reduce overall gasoline consumption, driving down concerns about gasoline prices over time – but even this shift will be slow.
Of course, America’s changing relationship with Middle East energy does present some opportunities for the United States. The shift from concerns about assured access to energy may allow the United States to reduce its role as the sole guarantor of security in the region, and increase its role as a partner to work by, with and through other countries to help them develop their capacity to provide for their own security and protect the region’s petroleum resources from disruptions. Although this may not seem like a significant shift in foreign policy, having a lighter footprint in the Middle East would allow the United States to be more nimble in an increasingly constrained fiscal environment.
The bottom line: America’s changing relationship with Middle East energy is important. But it is important not to oversell the foreign policy implications of this developing story. The United States has an outsized dependence on petroleum and until the United States makes significant efforts to diversify away from petroleum, America will have a stake in anything that affects the global petroleum market, including the Middle East.
2015 EIA Energy Conference
June 15-16, 2015 - Washington, D.C.
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February 26-27, 2015 - Houston, TX