5 - Oil imports: the failure of voluntarism

Summary

The postwar availability of foreign oil at nearly half the price of domestic supplies caused a major disruption to existing energy markets. Not only did it foreclose the potential market for synthetic fuels, but beginning in 1949, and for the next 20 years, it created a dilemma for the American political economy.

Since foreign oil was so much cheaper than domestic, it served the short-term interests of American consumers. Dependence on foreign oil, however, posed a problem for national security. In the long run, it could foster conservation of domestic reserves. But in the short-run event of geopolitical or military crisis, would domestic production capacity then be adequate? The perceived need for a U.S. presence in the Middle East and reasonable control of its oil resources by U.S. multinational firms confounded the dilemma. Since retention of their concessions depended on constantly increasing their output, those companies were invariably under pressure to increase deliveries of oil to the United States, the world's largest and fastest growing market.

As real as this dilemma was, it amounted to an allegory for a protracted conflict among interest groups that were competing for market share during a period of energy glut and declining prices.