Crude oil is a gift from our planet and a curse for many of its people. It is the most valuable commodity to everyday life on earth used by billions around the globe. The profits from its sales are enormous, and so is the environmental devastation and wars associated to it. Tens of millions of innocent men, women, and children have been murdered, orphaned, and displaced due to conflicts rooted in oil. The substance itself is toxic, and its extraction contributes to climate change. Have we ever asked ourselves while at the gas pump where petroleum is coming from and what needed to happen for it to get here? A brief history lesson explains how crude oil caused international crisis and and the direction the decline of oil production could take our world in.
In 1973, the U.S. had lost over half of their gold reserve due to national welfare programs and warfare in Vietnam. The U.S. needed to do something soon if they intended on continuing to be the most powerful military and economic nation in the world. At that time, Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela were sitting atop the known majority of what would soon become the most valuable commodity on the planet, crude oil. These five nations founded the Organization of Petroleum Exporting Countries (OPEC) in order to efficiently regulate and monetize their product. Former President Richard M. Nixon and former National Security Advisor Henry Kissinger decided it was time to try and make a deal to solidify America's place in the world for years to come. They were successful in getting Saudi Arabia to buy into their offer, and the rest of OPEC soon followed.
The petrodollar became the driving force of American economic, political, and military power for the next four decades, and the U.S. is still holding on to it while many believe oil is going the way of coal. If so, like coal for Great Britain, oil's decline could also result in the loss of imperial power for America.
In Nixon's book The Real War(1980), the former president knew the importance and eluded to the shelf-life of crude oil.
"Sometime in the 21st century, nuclear, solar, & geothermal may be sufficiently developed to meet the world's energy needs. But for now we live in an age of oil. In the decades just ahead this gives extraordinary strategic significance to the Persian Gulf. This means that one of the world's most troubled, unstable, and imperilled areas is also one of its most vital. In the industrial age, energy is the lifeblood of the economic system, and economic power is the foundation of military power."
In September, 2002, President Bush informed the world about "weapons of mass destruction" and Saddam Hussein's plans to use acts of "terrorism" against the U.S. and its allies. The U.S. leads an invasions into Iraq, called "Operation Iraqi Liberation." That name was soon changed to the Iraq War, perhaps because the acronym for Operation Iraqi Liberation is O.I.L. The Bush administration did their best to convey that the Iraqis were the ones they were interested in liberating, not the oil or the profit from the petrodollar. In June, 2003, as the war rages on, Iraqi oil sales officially go back to being denominated in U.S. dollars instead of euros. In 2007, the Guardian reported that "1.2 million people have died because of the conflict in Iraq." That same year, Alan Greenspan wrote in his memoir, The Age of Turbulence, "I am saddened that it is politically inconvenient to acknowledge what everybody already knows: the Iraq War is largely about oil."