Document created: 31 December 03
Air University Review, January-February 1972
Colonel William B. Haidler
We have a great country largely because of our supply and use of energy. Without control of that energy supply we would become a Samson shorn of his locks.
General George A. Lincoln,
Chairman of the President’s Oil Policy Committee
General Lincoln’s statement vividly indicates the level of concern for energy within the United States today.l Our short-term energy problems have become increasingly evident. The electrical power brownouts in the northeast, while primarily a consequence of insufficient generating capacity and not a lack of fuel, have caused citizens to be acutely aware of energy. Late in 1970, public attention quickly focused on the disruption of the Trans-Arabian Pipe Line and the agitation this minor change of 3 percent in the world’s oil supply caused in delivery rates and tanker fees.
In January 1971 fifteen international oil companies made an unprecedented offer to the Organization of Petroleum Exporting Countries (OPEC): to stabilize prices and ensure availability. Of even more note was the speedy reaction of the United States in setting up an interagency task force to watch OPEC developments; joining with major West European countries to present a united front to the OPEC; dispatching Under Secretary of State John N. Irwin II to Saudi Arabia, Kuwait, and Iran; and in giving antitrust clearance to the involved American oil companies for their activities in the group negotiations. The Department of the Interior recently recommended the Alyeska crude line across Alaska from the North Slope with the comment: “. . . the need for Eastern Hemisphere oil would be substantially reduced if North Slope oil is developed.”2
Secretary of the Interior Rogers C. B. Morton has advocated a national energy policy. A new law requires the Secretary to report annually on the adequacy of fuel supplies and to make recommendations to alleviate shortages. Federal Power Commissioner Albert B. Brooke, Jr., has announced that he would support an industry-government endeavor to determine priorities and pool resources for future energy production and environmental planning. Some senators are skeptical of White House energy studies and plan to sponsor their own investigation of our long-term energy requirements. Petroleum industry spokesmen are calling 1971 a historic year for United States energy policy.
The United States could not have developed into a superpower if abundant low-cost energy had not been readily available, and neither can it endure without it. Man consumes daily but a few thousand calories to sustain life; however, the average U.S. citizen daily uses approximately two hundred thousand calories.3 The large difference between calories needed to sustain life and those used is the energy required to move the tractors, condition the environment, extract the ore, process the material, distribute the product, and perform the myriad tasks associated with a highly complex, integrated, industrial society.
Now we hear cries that energy is becoming scarce. Simultaneously, others act as if energy resources were limitless. My purpose is not to argue the ultimate answer to this paradox. Today’s ultimate answer, if there is one, would not precisely predict tomorrow’s needs, discoveries, technology, or society. In time, any answer would probably be proven false. Rather, my purpose is to present projections of the U.S. energy requirements and resources, foreign and domestic, in conjunction with our announced foreign policy, but always remembering that energy is crucial to our future.
Americans like energy. Annually using 60 percent of the world’s energy production, we are the world’s largest consumer. Worldwide energy consumption is increasing about 3 to 5 percent each year; in the United States the increase is approximately 7 to 10 percent.4 We are and will continue to be in competition with all men and nations for energy. Nevertheless, considering our goals and the character of our people, we will probably retain our lead position. This has both advantages and disadvantages in light of where this energy must come from.
Coal is the only domestic fuel that alone could meet the estimated cumulative energy requirement of the United States between now and A.D. 2000. Approximately 100 billion tons would be required.5 Without great cost increases or the requirement for new recovery methods, at least 200 billion tons are estimated to be domestically available. With improved technology, this coal reserve could be greater. However, coal cannot compete economically today with oil, natural gas, and nuclear fuels in all areas and uses. A complete switch to coal would also cause monumental technological and economic shifts as well as changes in our society and habits.
To meet our cumulative demand by oil alone would require approximately 450 billion barrels. The U.S. reserves at the beginning of 1971 were 37 billion barrels.6 Obviously there is a wide gap; however, energy reserves are difficult to assess, discoveries come at unexpected times, and estimates rarely agree. Throughout the United States and the world, newly discovered oil reserves have exceeded consumption in recent years. Yet this cannot continue indefinitely. Fossil fuel reserves do have an ultimate limit; our domestic ultimate oil reserve is estimated at several hundred billion barrels, barely enough to cover our cumulative requirements by A.D. 2000 if all could be extracted.
Oil shale presents another domestic energy store. The Green River formation of the Colorado Rockies is estimated to contain over 1000 billion barrels of recoverable oil. The vastness of the supply is not the question; rather, it is the extraction and cost. By the year 2000 this tremendous reserve may begin to supplement our present sources.
Natural gas reserves are even more meager than those of oil. Approximately 2400 trillion cubic feet of natural gas would be required to meet the cumulative U.S. demand over the next thirty years. Today’s domestic reserves are only 265 trillion cubic feet. As with oil, domestic gas reserves fall woefully short. Improved technology, deeper drilling, nuclear stimulation, expanded exploration may all contribute to increased reserves. However, in recent years, new reserves have not kept pace with the spiraling consumption of natural gas. This is the domestic energy source in shortest supply.
Nuclear energy from a fission reaction is well proven and can significantly aid the United States. Growth in this field has been less rapid than original predictions suggested, but it is now speeding up. Nuclear fuel reserves are difficult to evaluate but are sizable, particularly with a breeding cycle. Nuclear and hydro plants will contribute to the generation of electric power but little to transportation, unless that transportation is electric.7
Hydro power is often proposed because of its cleanliness, simplicity, and the many streams seen about the countryside. Unfortunately, few sites remain for large hydro installations. Consequently, there is little additional aid available from hydro power—perhaps one or two percent of U.S. needs.
The exploitation of other domestic energy sources does not appear promising at this time. Nuclear energy from controlled fusion reaction offers great potential, but first tremendous scientific and technological advances must be made. The winds, tides, and geothermal heat may provide energy to specific localities. Solar energy may also contribute in some local areas, but because of its dilution this is not a general supply.8
In summary, based upon today’s reserves and projections, the cumulative energy needs of the United States from now to A.D. 2000 can be met entirely by domestic coal alone. No other single domestic energy resource would meet this cumulative demand; domestic oil and natural gas reserves will be strained to meet current demand trends. Our current use of various energy stores is the result of economic considerations, the energy use pattern of our society, and the ready availability of energy from outside the United States.
Since shortly before 1950, the United States has been a net importer of energy. We export coal but import oil and gas. Our future energy requirements and the convenience of liquid fuels increase pressure for ever greater importation.
Canada’s situation is similar to that of the United States, but scaled down. Her oil and natural gas reserves are approximately one-fourth of ours; hence, Canada’s reserves cannot drastically alter our long-term energy supply. Since a considerable portion of Canada’s electrical energy is generated from hydro power, whose sites are limited, in time Canada will turn more to thermal generation of electrical power. This will be a further demand on her own fossil fuel reserves. Even now, Canada imports 50 percent of her oil needs. Like the untapped oil shale deposits in our West, Canada has vast reserves in the oil sands of Alberta. These sands are estimated to contain hundreds of billions of barrels. Conservative projections at the 1967 technology level placed recoverable crude oil from these Canadian sands at 40 billion barrels.9 This is roughly equal to the domestic crude oil reserves of the United States excluding oil shale. While Canadian reserves cannot offer a long-term solution to U.S. needs, their ready availability should not be overlooked.
Mexico has oil reserves one-tenth those of the United States and even less comparatively in gas reserves. Thus, while again readily available, either quantity is insufficient for the long term. Venezuela’s oil reserves of 14 billion barrels are roughly one-third those of the United States. In fact, all the reserves of the western hemisphere outside the United States are but equal to our own domestic reserves. Energy is more abundant outside this hemisphere, and it is to those resources that we and others have turned with increasing interest.
Our allies of Western Europe are major users of energy, also. Unfortunately, Europe’s oil reserves, 3.7 billion barrels, are only one-tenth those of the United States. These are insufficient for European needs alone; Europe currently imports 95 percent of her oil requirements. Half of the European oil reserve is based on preliminary estimates of the recent North Sea discoveries, which are now being developed. European gas reserves are slightly more than one-half ours; these too are under rapid development. Thus, rather than being a potential source of energy to the United States, Europe may require our energy resources in the event her normal imports are disrupted.
The Asia-Pacific area has oil reserves one-third as large as those held in the United States. Ten of the 14 billion barrels of the Asia-Pacific area are in the new Indonesian fields. The gas reserves of the entire area are one-fifth ours. Japan, the rising industrial economy of the East, has negligible fuel reserves. In addition to almost all her oil requirements, Japan imports large amounts of coal. Hence, the reserves of the Asia-Pacific area are less than ours, and when developed they will be close to Japan and her growing needs.
The African continent has twice the oil reserves of the United States and almost two-thirds as much gas. Eighty percent of Africa’s reserves of oil are concentrated in the Algerian and Libyan fields, 30 and 29 billion barrels respectively. These nations require little oil for their own use and offer huge quantities for export. In 1970 North Africa supplied slightly more than half of Europe’s oil.
The Middle East is the energy giant. This oil-rich area contains oil reserves almost ten times as great as those of the United States. Half of the world’s known oil reserves are in the Middle East. Gas reserves are not as great; these are currently estimated as one-half of ours and one-fifth of the world’s. Japan currently receives 95 percent of her oil from the Middle East, and Europe receives almost 50. We also use large amounts of Middle Eastern oil.
A review of the world’s oil and gas reserves would not be complete without considering the reserves of the Communist countries. The Soviet Union is the major supplier to this bloc. Her oil and gas reserves are, respectively, twice and one and one-half times those of the United States. Even with these, the U.S.S.R. is an importer of oil to meet domestic and satellite demands. The Soviets too have turned to the Middle East for additional oil.10
In summary, while we are still fundamentally self-sufficient in all fuels and will remain so in coal, the United States has turned to overseas resources for considerable amounts of oil and gas. The reserves of the rest of the western hemisphere are roughly equal to our own and offer additional resources nearby. These are contained principally within Canada, Mexico, and Venezuela. Our major allies overseas have meager fuel reserves and are dependent principally upon North Africa and the Middle East for their supplies. We have turned to these same areas of the eastern hemisphere for additional energy supplies. The Soviets have too. North Africa and, in particular, the Middle East offer the only presently known liquid fuel reserves that can support the world’s long-term energy requirements.
Before considering our foreign policy as it relates to the energy needs of the United States, the meaning of reserves should be examined. Reserves are working inventory. They are known deposits on which the world is drawing. They are not the ultimate amounts to be drawn from any area. Undoubtedly the final figure will be higher, but how much higher? New fields will be discovered too, but where and when?
The reserves of the United States are probably better known than those of any other area because of heavier exploration for coal, oil, and gas. Of these three, coal estimates are most accurate. We are also drilling further for oil at a rapid rate—ten times the rate of Africa, twenty times that of the Middle East. The new areas offer better chance for new oil discoveries because they are less completely mapped. This is not to say that new finds, improved technology, and additional recovery from fields now abandoned will not add to our domestic reserves. Nevertheless, the probability of additional large discoveries is greater in the new fields than in the old. Consequently, an even greater preponderance of overseas reserves is probable.
Ultimate reserves have been estimated too. These also change with time. Not only are deposits proven or not found, but what is uneconomical today may become economical tomorrow. A set of ultimate estimates, made in 1962, gave projections for various areas.11 Time has already disproved some of these projections; the 1970 reserves of the Middle East exceeded the 1962 estimates of ultimate recovery from this area and North Africa combined. The trend is clear: the world’s significant liquid fuel reserves appear to be in the Middle East and North Africa. The reserves of these areas, if assured to the West, would give the Free World tremendous energy resources; but if lost to the Communist World, they would tip the balance as much to our disadvantage.
In President Nixon’s report to the Congress, US Foreign Policy for the 1970’s, the subject of energy resources is not discussed as an entity.12 Over the time span of the President’s report, the energy resources available to the United States are adequate, barring catastrophic events. We may expect distribution difficulties and minor supply perturbations, such as those anticipated for the northeastern United States last winter. This is particularly true of natural gas; midwestern customers are already inconvenienced. For the near term, though, our supplies are adequate. The supply problems that arise will be correctable and, while certainly disturbing, will not impair the nation’s overall advance. However, as we reach the end of the century our energy supplies, save for coal, will probably of necessity come from overseas in ever increasing amounts.
We will be in competition with at least Europe, Japan, and the U.S.S.R. for energy resources. The document US Foreign Policy for the 1970’s will influence our later actions. It will also lay the groundwork for our access to, or the availability of, future energy supplies. Our foreign policy for the seventies is clear—partnership. How well this partnership provides a basis for the availability of long-term energy resources will be vital to our economy and the entire Free World.
Within the western hemisphere the President has proposed a new partnership that would keep pace with the forces of change. We have formulated programs to share responsibility with other nations of the hemisphere as they formulate their own economic and financial programs along with expanded trade. In the future, by shared development responsibility, hopefully this hemisphere’s problems can be met.
Our plans to obtain to the maximum extent possible our increasing oil imports from Canada, Mexico, and Venezuela are consistent with this concept. Our foreign policy towards the western hemisphere, which is one of mutual support to further economic development within the hemisphere, complements these plans.
In Europe our prime goal is peace. A reconstructed Europe is recognized as a mature partner from which we can learn and receive counsel, a partner whose members, within the framework of the North Atlantic Treaty, pledge the promotion of stability, well-being, and the encouragement of economic collaboration. For the future, we plan to further this mature partnership, continue consultation with the European nations, develop a mutual understanding of our common purposes and respective roles in seeking a peaceful and stable European order, and expand cooperation in meeting the common social and human challenges of modern societies.
Europe geographically provides no energy resources to the United States; rather, our policy places us in a position of possibly insuring energy resources to Europe. In the past, our surplus production capacity was available to support Europe in emergencies. Unfortunately, our surplus domestic capacity no longer covers our own imports; by 1973-74, it is expected to vanish completely. Thus, as advocates of her peace and general well-being, and yet unable to supply Europe ourselves, we may become increasingly sensitive to threats to her North African and Middle Eastern supplies.
In Asia and the Pacific, the President seeks a community of free nations, each maintaining its own traditions and destinies, developing through mutual cooperation, including whatever cooperation we can give, yet based on Asia’s own resources. Japan intends to expand her aid programs within the area as her own economy grows. For the future, we foster self-reliance for the Asian-Pacific area. This policy of internal development for the Asians, with our help when necessary, will fit in well with Indonesian oil field development. The Japanese, with the technology, capital, and need, would find an economical source of energy close to their own industry and thus overcome some of their present dependence on the Middle East. As time progresses, this entire area would benefit. We would profit as well, by gaining another supplemental supply of energy.
For Africa, the United States has two major concerns for the 1970s: a continent free of great-power rivalry or conflict in any form; and an Africa able to realize its potential in the international community. We desire to help the Africans develop the Africa that they believe is best. We plan to devote our aid to the fundamentals of economic growth, as this will best assist Africa to realize fully her vast material resources.
In Africa, as we follow a policy of no great-power intervention and the development of Africa for Africans, our path may not be easy in the matter of energy resources. Europe, heavily dependent now on North African oil, would be the first victim of any capricious shutdown of the North African fields. We, as a European ally and economic partner, would quickly feel the effects. Algeria and Libya have already shown their independence by recent aggressive price demands. Our diplomacy in this area will closely consider the needs of Europe.
In the President’s Foreign Policy report, the Middle East is recognized as that area which presents a difficult path to peace because it has real conflict as well as great-power involvement. It has great resources and prospects for economic growth; it is already near to providing its own capital needs. Our desire for peace through partnership and accommodation of interests will be thoroughly tested.
The immediate concern is achievement and maintenance of Middle Eastern peace. This task will require the efforts of the people of the region, the United States, and the other great powers. For the future we hope to work together with the Middle Eastern nations. We will respect their interests and expect that they will honor ours. Our enunciated policy holds that the large powers cannot and should not determine the course or solve the problems of this area. The resolution of conflict is but one problem. Another is the form of our relationship with the Middle Eastern nations in order to maintain a productive relationship, particularly as they become increasingly self-sufficient. They also have near neighbors to turn to for help.
The Middle East is attractive to the Communist World as well as to the Free World. Here all energy desires meet. The Middle East is vital to Europe and Japan and is a major supplier to the United States. The Free World would be in an extremely difficult position without long-term access to the Middle Eastern energy resources at fair prices. Our policy of mutual respect and integrity and the desire of excluding major powers from the problems of the Middle East may be difficult to achieve in the long term without stability, rationality, and coordination among all the nations of the world, not just those of the Middle East.
The Soviet Union is no stranger to oil diplomacy. She imports oil for her own use while exporting her own to the Eastern European nations, which, by their dependence on Soviet oil, fall further under Soviet control. The U.S.S.R. presently plans to complete a natural-gas line from her fields to West Germany in October 1973. Should inexpensive gas from the U.S.S.R. compete with higher priced Middle Eastern crude oil, Soviet influence could be enhanced.13
The availability of oil is one concern, the price is another. The United States is presently more concerned with availability than price because our domestic oil is still adequate. The price of imported oil to the American consumer is largely governed by the price of domestic oil. This is not true in Europe, with no domestic oil industry to shield. In Europe an increase in import prices is soon felt by the consumer and industry, and thus a large fuel price increase could be a serious blow. In time, the entire world would experience the effects of a change in European prices, and subsequent changing balances of trade could be serious.
On the positive side, the United States and the Western European nations use huge amounts of energy. Together we are the world’s largest buyers. The Middle Eastern and North African sellers may try for all the profit they can, short of seriously hurting their best customers. While the Free World needs oil, the oil-producing countries need to sell oil to support their own programs. This situation will change but slowly, since decades are required to build or seriously modify modern industrial economies. The President’s US Foreign Policy for the 1970’s, while not specifically directed toward a consideration of energy from abroad, will, if successfully implemented, provide a base for obtaining this vital resource.
Air War College
1. George A. Lincoln as quoted in “Lincoln Pleads for US Energy Plan,” Oil and Gas Journal, Vol. 69, No.4 (January 25, 1971), p. 90.
2. Interior Department as quoted in “Interior Gives Alyeska Initial Blessing,” Oil and Gas Journal, Vol. 69, No. 3 (January 18, 1971), p. 25.
3. Ali B. Cambel, “Impact of Energy Demands,” Physics Today, Vol. 23, No. 12 (December 1970), pp. 38-45.
5. Hans H. Landsberg and Sam H. Schurr, Energy in the United States (New York: Random House, 1968), p. 162. Cumulative demands for 1970-2000 obtained by interpolation.
6. Values for 1970 were obtained by rounding current oil and gas reserves stated in “World Wide Oil at a Glance,” Oil and Gas Journal, Vol. 68, No. 52 (December 28, 1970), pp. 92-93. The North Slope of Alaska may contain another 10 to 15 billion barrels, according to that journal. Vol. 69, No. 4 (January 25, 1971), p. 123; higher estimates have been reported.
7. The major uses of energy within the U.S. by percentage used in 1960 were: industrial 35, commercial and other 25, transportation 20, residential 20. Landsberg and Schurr, p. 15.
8. For additional reading on the entire subject of energy, Landsberg and Schurr is recommended in its entirety, as is Gerald Manners, The Geography of Energy (London: Hutchinson and Company, Limited, 1964). An older publication, one of the first thoroughly documented studies of the maximum plausible world demands for energy over the next century, is Palmer C. Putnam, Energy in the Future (Princeton: D. Van Nostrand Company, 1953). Two broader writings on the subject are Charles G. Darwin, The Next Million Years (Garden City: Doubleday, 1953) and Sydney F. Markham, The Climate and Energy of Nations (London: Oxford University Press, 1944).
9. Landsberg and Schurr, p. 138.
10. Two interesting readings on aspects of the Soviet situation are Robert Hunter, “The Soviet Dilemma in the Middle East, Part I: Problems of Commitment,” Adelphi Papers No. 59, September 1969; and “Part II: Oil and the Persian Gulf,” Adelphi Papers No. 60, October 1969 (London: The Institute for Strategic Studies).
11. M. King Hubert, “Energy Resources,” Publication 1000-D, National Academy of Sciences (Washington: National Research Council, 1962).
12. Richard Nixon, US Foreign Policy for the 1970’s, (Washington: Government Printing Office, 1970).
13. For elaboration see Hunter, op. cit.
Colonel William B. Haidler (Ph.D., University of Arizona) is Assistant Director for Research and Development, Division of Military Applications, U.S. Atomic Energy Commission. He has served as Research and Development Special Projects Officer, Japan; with the Propulsion Laboratory, Wright Air Development Center; and as Professor and Head, Department of Physics, USAF Academy. He is a graduate of Air War College, 1971.
The conclusions and opinions expressed in this document are those of the author cultivated in the freedom of expression, academic environment of Air University. They do not reflect the official position of the U.S. Government, Department of Defense, the United States Air Force or the Air University.
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