Unformatted text preview: 20. New Center of 20. Gravity Gravity 1 Major Points America fueled most of World War II Growing sense − dominance not last Oil Gulf of Mexico / Caribbean Middle East new center Evident during the war − positioning for postwar order American roots in Saudi Arabia took hold during WWII
2 Time of 100 Men During WWII, the amount of oil men working in Saudi Arabia was reduced to 100 men Devoted themselves to protection of the wells not development in case they were bombed; also prepared themselves to destroy the wells in order to deny the Germans, if need be American orientation would soon change: Saudi Arabia was in another financial crisis However, FDR would not grant a Lend Lease to the country because it was not a democracy Britain stepped in and provided money to the government – American oil men in Saudi Arabia assured them that it was actually America helping out indirectly since Britain was a recipient of American assistance 3 Everette Lee DeGoyler Born in Kansas; raised in OK Introduced geophysics into oil exploration & seismography Discovered Portrero del Llano 4 well in Mexico, 110k / day A founder of Texas Instruments Huge respect in oil Hobbies U of OK; Took geology by accident (to avoid Latin!) Book collector Historian of chili 4 DeGoyler’s Mission Called to Washington by Harold Ickes to help organize and rationalize production in the U.S. A special foreign mission: to appraise the oil potential of Saudi Arabia and other countries of the Persian Gulf Returned to Washington in early 1944 Center of gravity of world oil production would shift to the Middle East 5 Allies Have the Money In 1940 Arabian Peninsula produced less than 5% world oil, U.S. produced 63% British sphere of influence, US out but knew there was enormous oil reserves 194243, Brits & Yanks plugging wells Ibn Saud strapped for cash, Brits helped FDR refused Oil men made sure that Saud knew US was helping Brits
6 “The Arabs have the religion, but the Allies have the money.” A New Outlook on the Middle East America’s entry into the war in 1942 and 1943 caused a whole new outlook to be placed upon Middle Eastern oil Oil was recognized as a critical commodity U.S. single handedly fueled the Allies during WWII, which significantly drained its oil reserves Number of new fields discovered fell off sharply Law of Diminishing Returns was in effect The U.S. was destined to become a net importer of oil; with potentially grave security implications. 7 Harold Ickes: “if there should be WWIII it would have to be fought with someone else’s petroleum….” Conservative Theory The U.S. government had to control and develop foreign oil reserves American policy makers arrived at the same standpoint that Britain had held since WWI: Centrality of Middle East
8 Reduce the drain on domestic supplies, Conserve them for the future, Guarantee America’s security Mistrust between Britain and U.S. Americans held unnecessary concerns about British intentions British actually wanted American involvement for security and financial reasons American options Direct government involvement during War – easy argument Direct government ownership (like AngloPersian) Negotiate deal w/ Brits Leave whole matter in private hands 9 Policy of Solidification Socal & Texaco knew the size of SA oil Solidification: Reduce risk of expropriation with direct government involvement Socal, Texaco, & Casoc with hats in hands asking feds for foreign aid to Saudi Arabia Ickes convinced FDR to extend Lend Lease assistance to Saudi Arabia, Feb. 18, 1943 (Army projecting oil shortage in 1944)
10 Afraid Brits would kick them out Saudi Arabia was only 20 years old Ickes’ (Wartime) Plan Feds Petroleum Reserves Corporation August 1943, Presidents Rodgers of Texaco & Collier from Socal, “They had gone fishing for a cod & caught a whale.” (Assistance not Assimilation!) Huge firestorm from oil industry: Ickes withdrew offer in late 1943 blaming Casoc for being too greedy Ickes other plan to finance foreign pipeline from Middle East to Mediterranean for transshipment to Europe− failed 11 Target Saudi Arabia & Feds buy a stake in Casoc FDR & Ickes wanted 100% Final bargain: 1/3 Casoc for $40 million Wrangling Over Oil: British Partnership Saw a coming glut & potential for allout competition − Vulnerability of the oil concessions U.S. gov’t explored partnership with Britain to manage world oil market Roosevelt to allay a British diplomat: Objective: “not rationing of scarcity, but orderly development and distribution of abundance.” Iraq and Kuwait were shared, Persian oil was for England, and Saudi oil was for the U.S. However, both sides continually disagreed and negotiations continued to carry on 12 Anglo-American Petroleum Agreement Signed on August 8, 1944 Objective: Assure equity to all parties, including the producing countries 8member International Petroleum Commission It would prepare estimates for global oil demand, Suggest quotas and price, and Report on how to promote development throughout the world Both independents and majors opposed for different reasons Defeated by the Senate, dead by early 1945
13 The “Twins” Ibn Saud and Roosevelt met. Mid Feb 1945 Roosevelt discussed Jewish homeland in Palestine, oil, and postwar configuration of the Middle East Ibn Saud wanted to assure continuing American interest Both got along very well, Roosevelt refrained from smoking in respect of Kings’ religious beliefs and also gave the King his extra wheel chair as a gift 14 Changes in the U.S. April 12, 1945 Roosevelt died in Warm Springs, WVA Harry Truman accepted Ickes resignation Several attempts to revive AngloAmerican Petroleum agreement but all failed – increasingly irrelevant U.S. was finding that it could not sustain itself on its production alone It was on its way from a net exporter to a net importer Everything that wartime negotiators sought to prevent was coming to pass: competitive, chaotic, and unstable Oil companies moved quickly to work out their own salvation in the Middle East for postwar world. 15 Video: Diplomacy QuickTime™ and a YUV420 codec decompressor are needed to see this picture. How did American and British government oil policies differ? Why is oil often referred to as a prize? Where did the King sleep and why? What errors did the British make and did they really matter? 16 ...
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This note was uploaded on 04/19/2011 for the course EGEE 120 taught by Professor Considine,timothy during the Spring '07 term at Penn State.
- Spring '07