Energy Independence &
American National Security:
Can the United States De-fund
the House of Saud?
Joshua Montgomery
Chicago-Kent College of Law
Spring 2007
joshmontgomery@hotmail.com
Within the title are two assumptions:
• Assumption 1: American dependency on
foreign oil is harmful, particularly, because
it threatens the national security of the US.
Assumption 2: A well-funded Saudi
Arabia is a danger to the national
security of the United States.
These assumptions prompt two
important questions:
• Question 1: If the US becomes an energy
independent nation, or at least largely so,
will Saudi Arabia be substantively defunded?
Question 2: Would a de-funded Saudi Arabia
be a positive development in the national
security of the US?
• Note: Question 2 is not a corollary to Assumption 2.
• It is possible that Saudi Arabia is a threat to American
national security regardless of whether it is well funded
or de-funded.
Assumption 1: American dependency on
foreign oil is harmful, particularly, because it
threatens our national security.
What harms stem from a dependency on
foreign oil?
One opinion: There are no harms.
 Not everyone agrees that it is dependency
that causes harm, just the way that the
dependency is managed.
 One proponent of this position is the
Reason Foundation, a libertarian think
tank.
Reason Foundation Position
• “America should become more – not less –
‘dependent’ on foreign oil. In fact, the best way
for America to defuse the so-called Middle
Eastern oil weapon is by purchasing even more
oil from the region.”
• Our dependence is the flip side of their
dependence. We can leverage our oil
purchases to control rouge states’ behavior.
The Majority Opinion:
“America is addicted to oil…”
• Since the 1973 oil embargo, 24 of the 34
State of the Union addresses have
proposed solutions to our energy problem.
• The result? In 1973 the US imported 34.8
percent of its oil. Today it imports just over
60 percent.
American Energy Security Declaration
of Energy Independence
•
•
•
•
It will provide stability at the gas pump.
It will protect the environment.
It will facilitate industrial development.
It will eliminate the trade and budget
deficits.
• It will create more than a million jobs.
• It will foster new technologies.
• As of May 2007 this declaration was signed by
the governors of 9 states.
National Security and US
Oil Dependency
• McCain: In many parts of the world where
we are dependent upon our oil supply
there's either instability or challenges. So I
think it is a national-security argument to
reduce our dependency on importing oil.
• Hillary Clinton: Our dependence on foreign
oil threatens our economy and hamstrings
our national security.
The Saudi Arabia Connection:
It’s how they spend their money
• “Over the last three decades, Islamic
extremism and violence have been funded
from two countries, Saudi Arabia and Iran,
not coincidentally the world's first and
second largest oil exporters.”
– Newsweek 2005
Assumption 2: A well-funded Saudi Arabia is
a threat to the national security of the US
• As a core tenet of its foreign policy, Saudi Arabia
funds the global propagation of Wahabism.
• Saudi Arabia has been the single biggest source
of funding for fanatical interpretations of Islam,
and the embodiment of that interpretation in
organizations and schools has created a selfperpetuating institutional basis for promoting
fanaticism across the Muslim world.
Saudi Arabia & Human Trafficking
• Saudi Arabia is a destination country for workers from
Southern Asia who are subjected to conditions that
constitute involuntary servitude including being subjected
to physical and sexual abuse, non-payment of wages,
confinement, and withholding of passports as a
restriction on their movement
• Tier 3 - Saudi Arabia does not fully comply with the
minimum standards for the elimination of trafficking and
is not making significant efforts to do so
Saudi Arabia & Women’s Rights
• Women in Saudi Arabia who walk
unaccompanied, or are in the company of a man
who is neither their husband nor a close relative,
are at risk of arrest on suspicion of prostitution or
other "moral" offences.
• A woman's testimony does not carry the same
weight as that of a man. In a Shari'a court, the
testimony of one man equals that of two women.
• Women cannot speak in family law courts.
Criminal Law in Saudi Arabia
• The Government executed persons for
criminal offenses after closed trials in
which forced confessions are common and
few procedural safeguards are provided.
• Sentencing is not uniform…under Shari'a
as interpreted and applied in Saudi Arabia,
crimes against Muslims receive harsher
penalties than those against non-Muslims.
Question 1: If the US becomes more
energy independent will Saudi Arabia
be substantively de-funded?
• Saudi Arabia is the leading oil exporter.
• The United States is the leading oil
consumer.
• At first glance the answer to this appears
to be yes.
Country
Top World Oil Net Exporters, 2005
Saudi Arabia
Russia
Norway
Iran
UAE
Kuwait
Nigeria
Venezuela
Algeria
Mexico
Libya
Iraq
Angola
Kazakhstan
Qatar
0
2
4
6
8
10
Net Oil Exports (million barrels per day)
Top World Oil Consumers, 2005 (millions of bbl/d)
United States
25
China
20
Japan
Total Oil 15
Consumed 10
Russia
Germany
India
5
Canada
0
Brazil
Ccountries that consumed more
than 2 million bbl/d in 2005
South Korea
Mexico
U.S. Consumption, Production, and Imports of
Oil, 1949–2005
25
Million Barrels per Day
20
Consumption
15
Production
10
5
Net Imports
0
1949
1954
1959
1964
1969
1974
1979
1984
Source: EIA Annual Energy Review 2005.
COUNCIL ON FOREIGN RELATIONS
1989
1994
1999
2004
US Petroleum Imports from Saudi Arabia
(Thousand Barrels per Day)
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
1973 Average
1975 Average
1980 Average
1985 Average
1990 Average
1995 Average
1996 Average
1997 Average
1998 Average
1999 Average
2000 Average
2001 Average
2002 Average
2003 Average
2004 Average
........................486
........................715
.....................1,261
........................168
.....................1,339
.....................1,344
.....................1,363
.....................1,407
.....................1,491
.....................1,478
.....................1,572
.....................1,662
.....................1,552
.....................1,774
.....................1,558
Thousand Barrels per Day
0
BRAZIL
CHAD
COLOMBIA
LIBYA
IRAQ
ECUADOR
KUWAIT
UNITED
NIGERIA
ANGOLA
ALGERIA
CANADA
MEXICO
SAUDI
VENEZUELA
2007 US Crude Oil Imports (as of 4/17)
2,000
1,500
1,000
500
Top 15 Exporting Countries
De-funding hardly seems possible.
• Demand side: Saudi Arabia is a minority
share of American market
• Supply side: American purchases are only
a fraction of the Saudi Arabian market
– Note: This is one reason why the libertarian
idea of “consumer control” is ineffective and
unrealizable.
It only gets worse….
• Dwindling supply
– US oil production is low
– Saudi Arabian oil fields may be dwindling
• New measurements are not being allowed
• Increasing number of wells are being built and
capacity is remaining the same  wells aren’t
producing the amounts they were before
– Running at capacity? No one knows…
If the supply is dwindling….
• Scarcity drives up the price
– No new (easily accessible) fields are being
discovered
– Pessimism about expected supply
• Companies are less likely to devote huge sums of
money to get the oil
• Race to the oil is unlikely – prohibitive costs are to
high
• The result: Saudi Arabia stays well-funded from
its high priced remaining oil supplies
The other end of the tunnel…?
• If Saudi Arabia’s supply is not dwindling:
– Emerging markets
• China & India
• Their growth is expected to more than surpass any
amount that the US can realistically cut
– Saudi Arabia can control a majority of the
supply side of the world oil market
Foreign Investments
• Saudi Arabia is encouraging foreign
investments
• Increasing ownership of foreign assets
– Largest shareholder of Citibank is Prince Al
Waleed
Question 2: Is a de-funded Saudi
Arabia good for US national
security?
Some Pro’s
• International spread of Wahabist Islam will
certainly be decreased.
• Human trafficking in Saudi Arabia would
decrease because the flow of immigrant
workers would cease.
• A bankrupt Monarchy would almost
certainly collapse.
Some Con’s
• Saudi Arabia could cash in it’s chips – and
it has a lot of chips (investments in foreign
markets).
• If the monarchy collapsed a new regime
could always be worse…
– Although it is doubtful that they would wield the
same influence as Saudi Arabia does now.
• America’s Military Industrial complex would
suffer.
Conclusions:
• America is dependent on foreign oil, but most of
this oil does not come from the Middle East.
• This makes it nearly impossible to de-fund Saudi
Arabia directly.
– But the US should contribute as little as possible to
hostile/radical regimes
• Energy independence is still in US national
security interests.
– Independence means the economy wouldn’t be
subject to the whims of foreign governments via the
oil market.