The Oil and the Glory

The Weekly Wrap — April 13, 2012

The Weekly Wrap — April 13, 2012

Whatever happens, an enduring U.S. naval fleet: Evidence is mounting that the U.S. will maintain its global naval footprint regardless of any shift in energy or geopolitics: Despite the shrinkage or disappearance of primary raisons d’etre, the Navy obtains other rationales for its current size. Here at FP, Robert Farley suggests that the Obama Administration regards the Navy as an organic tool for sustaining long-term geostrategic balance with China (pictured above, the nuclear-powered aircraft carrier USS Carl Vinson, docked in Hong Kong.). That explains the administration’s shift of U.S. naval attention to Asia.

But what about the Carter Doctrine, under which the U.S. treats the Persian Gulf as covetously as if it were located off U.S. shores. Given the fresh belief that the U.S. is on the verge of virtual oil-independence, isn’t this the moment that some folks have long awaited — when the U.S. no longer must protect Saudi Arabia, and can save trillions of dollars in protective military spending underlying oil prices? The answer is no, says retired Gen. Chuck Wald, former deputy commander of the U.S. European Command. "If it had not been for oil and our dependence on oil, which started with Churchill, we would still feel a need to have a presence in the Middle East — because of Israel," Wald told me. He said:

It is not an ‘either-or’ situation, the way that some people say, that if it were not for oil we wouldn’t have to worry about defending the sea lanes and all that. If you really look at one of the most interesting threats to sea lanes, it is the pirates off the coast of east Africa, and it has nothing to do with oil. … [Whatever happens with oil] we are still going to have a growing interdependency based on commerce. As I used to say when I taught at the National War College, when the world has a problem with things globally, they like to call 1-800-USNavy.

I spoke with Wald by phone prior to his appearance at a Deloitte-sponsored event in Washington titled, "The Realities of Energy Security through Supply Independence." He feels strongly that the U.S. needs to build up energy self-sufficiency in order to have a more independent foreign policy. But he simply doesn’t think that, while becoming more independent, the U.S. role abroad will lessen. Iran, Wald said, "is playing us like a drum right now from the standpoint of foreign policy based on the pressure they can put on us on the concern about [oil supply] disruption — this is a bad situation we put ourselves in." Wald:

We are in a situation that doesn’t get any better, even though we are [headed toward] an interestingly bright future energy-wise because of fracking and potential imports from Canada and potential technology breakthroughs in the Gulf of Mexico.


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New season of South China Sea fishing disputes: No sooner did Southeast Asian leaders wrap up a summit where they discussed their mutual tension with Beijing, then the Philippines and China got into a scrap. Last week, as discussed, Southeast Asian leaders met in Phnom Penh, where Philippine leader Benigno Aquino unsuccessfully pushed for a common stand against China’s claims of sovereignty over the whole of the South China Sea. Now, a Philippine naval vessel is in a standoff with three Chinese naval ships off the northwest Philippine coast. The proximate friction is over the presence of about eight Chinese fishing vessels in a place called the Scarborough Shoal, which both countries claim. The Philippines objects to this fishing, so sent in a warship to chase them out. That angered Beijing, which dispatched three ships to block the arrest of some of the fishermen, the Associated Press reports. But the greater tension grows out of China’s efforts to enforce naval primacy over this part of the Pacific, and to dominate the hunt for hydrocarbons there. China’s pursuit of this future will be relentless, as will its neighbors’ claims to portions of the sea near their shores.


Israel, Egypt, and what to do with your big new gas field: For the 14th time since Hosni Mubarak fell from power, assailants have blown up an Egyptian pipeline through which Israel obtains about 60 percent of its gas supplies. When you juxtapose that against an estimate of the gas equivalent of more than 5 billion barrels of oil in Israel’s portion of the Eastern Mediterranean, you can imagine Israel’s calculus on the following question: Should I export some or most of that bonanza for the big bucks, or husband it for use at home, and be free of dependence on unreliable neighbors?

Israel consumes just 3.6 billion cubic meters of gas a year, and production may be double that volume, leaving a surplus, according to a report by Barclays Capital. One idea floated by a local expert panel in a report to the Israeli government is "to retain enough of its natural gas resources to satisfy 25 years of its own domestic requirements and only then allow for the exports of the surplus," Barclays said. Don’t be surprised if Israel spurns the world’s club of major liquefied natural gas exporters. But, in a bow to local politics, it may sell gas to Jordan and the Palestinians.