DURING THE SUMMER of 1990, the world was still in the euphoria over the end of the Cold War and the new, more peaceful world that it portended. For 1989 had certainly been the annus mirabilis—the miracle year—in which the international order had been remade. The East-West confrontation was over. The communist regimes in Eastern Europe had collapsed, along with the Berlin Wall itself, the great symbol of the Cold War. The Soviet Union was in the midst of a profound transformation arising not only from political and economic change but also from the eruption of long-repressed ethnic nationalisms. Democracy appeared to be taking hold in many countries where, until shortly before, such a possibility would have been dismissed as totally unrealistic. German reunification was no longer an abstract subject for rhetoric and discussion, but an imminent reality; and the reunified Germany would be the predominant power in Europe. Japan was now seen as the global financial powerhouse; and the confrontations of the future would surely become global competitions for money and markets, and for economic growth—a prospect that seemed so down-to-earth that some said what was at hand was not only the end of the Cold War, but also “the end of history.”
Oil remained high on the agenda of environmental concerns, but otherwise it appeared to have become rather unimportant, indeed just another commodity. Consumers were happy, for oil prices were low. In real terms, American motorists were actually paying less for gasoline than they had at any time since World War II. There did not seem to be any long-term problem of supply; after all, proven world oil reserves had been mightily increased—from 670 billion barrels in 1984 to 1.0 trillion barrels in 1990.
Yet, amidst the complacency, there were reasons for caution. While vast additions had been made to world oil reserves, they were all concentrated in the five major oil producers of the Persian Gulf, plus Venezuela. There was no large inventory of diversified, non-OPEC oil waiting to come into the system, as had been the case with Alaska, Mexico, and the North Sea at the time of the 1973 crisis. The Persian Gulf’s share of world oil reserves had now actually increased to two-thirds of the total.
In economic terms, the oil picture looked a lot less like the early 1980s than the early 1970s, which had set the scene for the 1973 oil shock. The world petroleum market was tightening. Demand was growing with some vigor. American production was plummeting—between its 1986 high and 1990, by two million barrels per day, a volume greater than the individual output of 10 out of 13 OPEC countries in 1989. United States oil imports were at the highest level ever, and still going up. The world was moving back to high dependence on the Persian Gulf. The “security margin”—the gap between demand and production capacity—was shrinking, which would make the market more susceptible to conflict and accidents. That margin had been large enough in the early and mid-1980s to absorb the Iran-Iraq War with all its disruption and loss of output, but no longer.
How high would oil prices go? That was dependent on how rapidly new production capacity was added around the world. With low prices and the renewed confidence about the security of supplies, conservation had run out of steam. The effort to develop alternative sources had even become anemic. In addition, an overall immobility had taken hold in many countries, reflecting the inability to resolve the conflict between energy and environmental concerns. Still, energy crises did seem a thing of the past. At a U.S. Senate hearing in the spring of 1990, it was argued that the probability of a major disruption was minimal, at least for the next several years. And some futurists and analysts announced in the spring of 1990 that there could not possibly be any oil crises in the decade of the 1990s.
At 2:00 A.M., on August 2, 1990, those expectations were ripped away. A hundred thousand Iraqi troops began their invasion of Kuwait. Meeting little resistance, Iraqi tanks were soon rolling down the six-lane highway toward Kuwait City. And so the first post-Cold War crisis turned out to be a geopolitical oil crisis.
Over the preceding several years, most of the petroleum exporters had sought to rebuild the links to the consuming countries that had been broken in the 1970s. Owing to the huge additions to reserves, these producers no longer worried that they were rapidly wasting a depleting resource. Instead, they wanted to demonstrate that they were reliable, long-term suppliers, that they could safely be regarded as the energy reserve for the industrial world—and that petroleum could be counted on. Oil needed markets, and markets needed oil; that calculation of mutual self-interest would be the basis of a stable, constructive, non-confrontational relationship that would extend into the twenty-first century.
Iraq was one of the exceptions. It did not hide its hostility to its main customers, the industrial world. In June 1990, Iraq’s dictator, Saddam Hussein, warned the West that the oil weapon could well be applied again. Though he claimed to be at the vanguard, Saddam Hussein was a strangely anachronistic figure, a kind of throwback. He asserted himself with the nationalistic rhetoric and anger of the 1950s and 1960s. He would say that Joseph Stalin was one of his models, at the very time that Eastern Europe and the Soviet Union were trying to extricate themselves from the legacy of Stalin’s terror and hypocrisy. Saddam Hussein created his own massive cult of personality.
Not only were huge portraits and photographs of him to be seen everywhere in the country, but so omnipresent was his dominance that he would proudly declare in 1990, a month before the invasion of Kuwait, that “Saddam Hussein… is to be found in every quantity of milk provided to children and in every clean, new jacket worn by an Iraqi.”1 He also had his own considerable reputation for personal brutality. Videocassettes circulated in the Middle East of the meeting in which Hussein had purged his rivals, and of the bodies of executed military officers displayed on meathooks. Hussein’s military forces had used poison gas both against the Iranians and against Kurdish women and children in his own country. When one Western visitor bluntly asked him, in late June of 1990, about his reputation for ruthlessness he blandly replied: “Weakness doesn’t assure achieving the objectives required by a leader.”2
Since 1985, Iraq had been the world’s largest purchaser of arms, and it was engaged in a strenuous weapons development and acquisition campaign, supported by an intricate and secret international procurement network. The Israelis had destroyed Hussein’s nuclear weapons fuel facility in 1981, but he had resumed the drive for nuclear weapons and had publicly boasted of building up an arsenal of chemical weapons. Iraq was a closed police state, but Saddam Hussein’s objectives seemed clear: to dominate the Arab world, to gain hegemony over the Persian Gulf, to make Iraq into the predominant oil power—and ultimately to turn Greater Iraq into a global military power. But Iraq was also suffering considerable financial weakness. The Iran-Iraq War, which Saddam Hussein had launched, had cost the country half a million deaths and serious casualties and had ended in a stalemate. Yet a nation of eighteen million was continuing to support a million-man army. Hussein wanted higher oil prices and very soon; Iraq was devoting about 30 percent of its total gross national product to Saddam’s war machine, and even as Iraq scoured the world for new, deadly, and sometimes bizarre weapons, it was not paying its international bills.
In July 1990, Iraq moved 100,000 troops to its border with Kuwait, which was identified with a low oil price strategy. The troops were seen as pieces in a war of nerves, as tools in Saddam Hussein’s new role as “enforcer,” ensuring that countries like Kuwait and the United Arab Emirates observed their quotas, and forcing up OPEC’s prices. After some hesitation, the Kuwaitis responded. The Amir abruptly replaced the Kuwaiti oil minister, the focus of Iraqi criticism; and along with the United Arab Emirates, Kuwait reined in its production and began to observe its OPEC quota. By mid-July 1990, only one country was cheating, exceeding its OPEC quota, and that was OPEC’s self-appointed enforcer—Iraq. The Iraqi soldiers were also being used, it was thought, to threaten Kuwait into giving way on a border dispute that involved a large oil field and into handing over two islands to Iraq. Yet Baghdad, all along, had something much more in mind—invasion and annexation of the whole country. It was the ultimate in strategic surprise. The troops were there, they were evident for all to see, they were meant to be threatening, the satellites clicked away, and yet hardly anyone thought that they would be used in the way they were. Last minute urgent warnings from intelligence analysts were discounted in the face of Hussein’s personal promises to several other leaders, including President Mubarak of Egypt and King Hussein of Jordan, that he was not planning any hostile action. With the invasion, the Kuwaiti royal family fled, and the small country was in Iraqi hands. The Kuwaitis had survived over two centuries by being smart and knowing how to play neighbors and larger powers off against each other; and even when the Iraqi troops massed on their borders, they thought they could outsmart the Iraqis as they had done for so long. This time, however, they were taken by surprise.
To justify his actions, Hussein offered a plethora of rationales. He claimed that Kuwait rightfully belonged to Iraq and that the Western imperialists had snatched it away. Actually, Kuwait’s origins went back to 1756, two decades before the United States declared its independence, and certainly much before the beginnings of modern Iraq, which was knitted together in 1920 out of three provinces that had been part of the Ottoman Empire for four centuries and, for several centuries before that, had been outlying provinces of various other empires. The Iraqis said that the British had drawn their border with Kuwait to deny Iraq its due—and its oil. In fact, the border adopted at a 1922 conference (which deprived Kuwait of two-thirds of its territory) was a simple copy of the border the Turks had agreed to in 1913, before the First World War. Moreover, in 1922, expert opinion held that there was no oil in Kuwait.
In 1980, in launching the war with Iran, Saddam Hussein had made a grave miscalculation, one that had almost cost him his position: He had assumed that it would take only a few weeks to knock off Iran. He was wrong, and Iraq came close to being defeated. A decade later, in 1990, he assumed that he could swiftly absorb Kuwait and confront the world with a fait accompli, which would arouse some complaints but little else. In the meantime, he would have solved his financial problems overnight and would have acquired the wherewithal to finance his grandiose military and political ambitions. He would be the hero of the Arab world; Iraq would be the number one oil power; and, like it or not, the Western countries would have to bow before him.
Once again he had miscalculated. And that was the second surprise. The opposition to his move developed an unprecedented unanimity in the international community and in much of the Arab world. “This will not stand, this aggression against Kuwait,” George H. W. Bush announced a few days after the invasion. And he meant it. The United States, making use of personal connections with other leaders that Bush had developed over twenty years, took the lead in marshaling and coordinating the opposition. Led by Secretary of State James Baker, it proved a far more successful and stunning diplomatic achievement than Saddam Hussein—or indeed many others—could possibly have expected. The Iraqis had failed to recognize how drastically the interests and position of the Soviet Union, until recently an ally, had shifted. The United Nations did what the League of Nations had failed to do in the 1930s—imposed an embargo to frustrate aggression. But Kuwait was not the end of the matter. The disposition of Iraqi forces and the way they were being resupplied suggested that they might plunge on toward the lightly defended Saudi oil fields. Fearful that Saudi Arabia might well be next on Hussein’s list, many countries hurriedly sent military forces into the region. American forces were by far the largest component, reflecting guarantees that went back to Harry Truman’s letter to Ibn Saud in 1950.
The possible repercussions of the crisis were enormous for the 1990s and the twenty-first century. If successful in holding on to Kuwait, Saddam Hussein would directly control 20 percent of OPEC production and 20 percent of world oil reserves and would be in a position to intimidate neighboring countries, including other major oil exporters. He would be the dominant power in the Persian Gulf, well equipped to resume his war with Iran. He would have the economic freedom to take even larger steps.
The collapse of communism and the agonies of the Soviet Union had left only one superpower in the world—the United States. The absorption of Kuwait could start Iraq on the path to becoming a new superpower. Eleven years earlier, four out of five of the major producers of the Persian Gulf had been pro-Western. With Kuwait absorbed into Iraq, there would be only two friendly producers. George H. W. Bush summed up the dangers as he saw them: “Our jobs, our way of life, our own freedom and the freedom of friendly countries around the world would all suffer if control of the world’s great oil reserves fell into the hands of Saddam Hussein.”3
The public debate in the West was marked by a continuing search for a single factor to explain the response of the Bush Administration. But, as is usually the case in great events, there was not the luxury of a single explanation. Aggression, sovereignty, and the shape of the post-Cold War order were all central considerations. Different people in the United States reached for different analogies. Some warned of another Vietnam and the dangers of a quagmire. While George Bush himself was determined to avoid “another Vietnam,” he was a product of his generation and his experience, and he thought back to the late 1930s, Adolf Hitler, and the origins of the Second World War. Fifty million lives had been lost in that conflict. Had Hitler been stopped at the Rhineland in 1936 or in Czechoslovakia in 1938—when Czechoslovakia had more tanks than Germany—those lives might well have been spared. Once again, here was a dictator who blatantly lied and dissembled, who was totalitarian in the way he ran his country, who was obsessed with weapons and power and seemed to have no scruples, and whose ambitions appeared to be unlimited. The Ba’th doctrines provided the rationale to reach far beyond Iraq’s current borders. A greater Iraq, which had succeeded in absorbing Kuwait, would be well on its way to turning itself into a formidable nuclear weapons state.
This was the real significance of the “oil factor,” the way that oil would be translated into money and power: political, economic—and military. Saddam Hussein knew what it would mean to acquire an additional 10 percent of world oil reserves, especially as not much in the way of population came with them. If he kept the grip on Kuwait, Iraq would be the planet’s dominant oil power, and the other petroleum producers would bend to his diktats, just as they had begun to do in the summer of 1990, before the invasion. He would gain a decisive say over the world economy, and he would be courted by economic and political leaders. His aggressive arms procurement effort would be much enhanced, and suppliers of every kind of technology, eager to tap into the biggest market for weaponry and related technology, would in due course be at his door offering him the very latest. It would not take Saddam Hussein, equipped with nuclear and chemical weapons know-how, long to turn Iraq into a regional power and perhaps, as Hussein extended his reach, into a global superpower. At a certain point, it would become too costly and too dangerous to try to check him. And the post-Cold War order would turn out to be different and much less benign than was generally imagined—and hoped—at the beginning of 1990. In short, oil was fundamental to the crisis, not “cheap oil,” but rather oil as a critical element in the global balance of power, as it had been ever since the First World War. Such is one of the great lessons of the last hundred years.
The New Oil Crisis
Owing to the disruption and the embargo, four million barrels of oil were abruptly removed from the world oil market—on the same scale as the 1973 and 1979 crises. The uncertainty was very high, and, as in previous crises, unsure companies and consumers built inventories. Oil prices skyrocketed, and financial markets plummeted. A new oil shock was at hand—the sixth post-war oil crisis.
OPEC was thrown into its worst crisis ever by the Iraqi invasion. It was now sovereignty and national survival and not merely the price of oil that was at stake, and most of the members explicitly stepped forward to increase production to compensate for the lost output from Kuwait and Iraq, further isolating Iraq and, in effect, underlining their commitment to a new alignment with their customers.
The sharp price rise was driven not only by the supply loss itself, but also by anxiety, fear, and anticipation of conflict. When, in late September 1990, Hussein threatened to destroy the Saudi petroleum supply system, prices on the futures markets leaped toward $40 per barrel, more than double what they had been before the crisis. The high prices reinforced recessionary trends in the U.S. economy. As crude prices rose, so did gasoline prices, accompanied by criticism and investigations. This time, however, in contrast to 1973 and 1979, there were no allocations or controls in the United States to hinder market responses, and neither gas lines nor any significant supply distortions resulted.
The global supply system responded both to higher prices and to urgent appeals for increased production. By December 1990, the lost production had been completely compensated for with “relief” oil produced from other sources. Saudi Arabia alone brought three million barrels per day of shut-in oil back into production, making up for three-quarters of the lost supply. Other major increments of additional supply came from Venezuela and the United Arab Emirates. But any country that could increase its production by 25,000 or 50,000 barrels per day also hastened to do so.
At the same time, demand was weakening, as the United States and other countries headed into economic recession, which in turn meant a reduction in the need for oil. While the International Energy Agency did not formally activate its emergency energy security program, it did take a leading role in informal coordination.
From an oil perspective, one big question stood out. Would the United States use its Strategic Petroleum Reserve, created in the middle 1970s and now holding about 600 million barrels of oil, in the event of further disruption? For a couple of months, there was a spirited debate as to “original intent.” Was the SPR to be used only in the event of a “physical shortage,” or was it also to be used to head off a major price spike that would seriously damage the economy? Some pointed out that a physical shortage might exist at $20 a barrel but would be eliminated at $40—though, in the meantime, a doubling of the oil price would deal a heavy blow to the economy. By November 1990, the debate was resolved. In the event of conflict, the principle of “early release,” previously promoted by the Reagan Administration, would be applied, and the SPR might well be used to flood the market with oil, preventing sharp price hikes driven by a panic build-up of inventories, as had happened in 1973 and 1979.
Altogether, then, by late autumn, the supply-demand picture was improving day by day, and prices began to decline. Still, as the crisis dragged on toward the winter, the fundamental question remained: What would happen if military conflict actually started?
And, as irrational as that seemed, the prospect looked increasingly likely. Despite various diplomatic ploys and the manipulation of Western hostages, Iraq gave little indication that it would pull out from Kuwait. On the surface, it would have seemed, Saddam Hussein was running an enormous risk, but he did not necessarily think so. He was playing for time, which he was convinced was on his side. Iraq was moving quickly to absorb Kuwait, brutally and with terror, and to drive out the Kuwaiti population. At the same time, Hussein was convinced that he could wear down and outlast the unwieldy coalition arrayed against him. He had been 19 at the time of the 1956 Suez Crisis, and he had observed how Nasser had succeeded in splitting the Western alliance. Surely, he would find opportunities to do so with this much larger and ungainly coalition of nations. Somewhere, there would be a chance to play the “Israeli card,” and so force the Arab countries out of the coalition. Or he could make overtures to some of the Western countries and sow dissension. Or he could draw off the Soviet Union. With time, he could find ways around the sanctions, or they would simply erode. With Vietnam in mind, as well as the swift U.S. withdrawal from Lebanon after the deaths of several hundred U.S. Marines in 1983, he fundamentally doubted American resolve.
The Bush Administration, too, recognized the factor of time, and that time would work against the thirty-three-nation coalition. How long could the united front be held together? How long would sanctions hold? And how long before Saddam Hussein had effectively dismantled and destroyed Kuwait and “Iraqized” it? The Soviet Union was in a new and highly unstable situation, with its own political system under great stress. The Soviet military had long had very close ties to Iraq. Would the USSR shift positions away from the coalition and back toward Iraq? And how long would the American public go along with the commitments that had been unfolding since August 2?
The Bush Administration ruefully came to the same conclusion as Saddam Hussein: The longer the crisis went on, the greater the chances that Hussein would be able to claim a “victory.” At the end of October and in the first days of November, the U.S. government decided that the coalition had to be prepared to do more than defend Saudi Arabia. It had to put in place an offensive capability. On November 8, Bush announced a large increase in U.S. forces in the Gulf “to insure that the coalition has an adequate offensive military option.” That meant a doubling of U.S. forces in the region.
Still, there was propaganda but no movement from Baghdad. Saddam Hussein had imposed 500,000 casualties on his countrymen in the Iran-Iraq War—the equivalent, if adjusted to population, to 7.5 million casualties for a country the size of the United States. This was the result of his own blunder, but he hardly showed any remorse. Indeed, in the huge monument Saddam built to Iraq’s “victory” in the Iran-Iraq War, the giant hands holding the two swords were models of his own hands. While Saddam could force further large casualties on Iraq, he doubted that the United States would be willing to absorb even a tiny fraction of the casualties. He looked down on the United States and, like Hitler before WWII, thought its people soft and flabby, without staying power. He had signalled his thinking at a meeting with the U.S. ambassador to Iraq in late July, eight days before the invasion, when he had disdainfully declared that America “is a country which cannot accept 10,000 deaths in one battle.” Now, to drive home his point, he flaunted the use of chemical weapons. But Saddam still was not taking seriously the clear signals from the capitals of the coalition members, and he showed continuing indication of underestimating George Bush. Was Hussein miscalculating again?
Now, as had happened before in the twentieth century, the clock began to tick unmistakably. On November 29, the United Nations Security Council passed Resolution 678, giving Iraq “a pause of goodwill”—until January 15, 1991—to comply with Resolution 600 and withdraw from Kuwait. Otherwise, “all necessary means” would be employed to ensure compliance. A variety of public figures—ranging from ex-prime ministers of various coalition partners to a would-be Democratic Presidential candidate to a retired boxer—were trooping to Baghdad to promote peace plans and to help free hostages. In December, Saddam released several hundred foreign hostages, thinking that such an act would undercut the coalition’s resolve. But it did not work as he had anticipated, especially as knowledge of Iraqi atrocities in Kuwait seeped out to the rest of the world.
The waiting continued. At newspapers and television stations around the world, newsrooms were being reconfigured to provide for “war desks,” and editors and producers were figuring out how they would deploy their staffs in the event of military conflict. And yet many did not believe, fundamentally, that their plans would have to be acted upon. Rationality would prevail; Saddam Hussein would surely find a way to extricate himself, potentially leaving the leaders of the coalition highly exposed, perhaps even looking quite foolish.
On January 9, 1991, Secretary of State James Baker met in Geneva with Iraqi Foreign Minister Tariq Aziz. Could the deadlock be broken? After more than six hours of talks, a grim Baker emerged to report that he had found no flexibility in the Iraqi position and that Baghdad was about to make “yet another tragic miscalculation.” Baker had sought to give Aziz a personal letter from President Bush to carry to Hussein, but Aziz refused to accept it.4
On Saturday, January 12, the U.S. Congress concluded a three-day debate by giving the President the authority to go to war—by a slim vote of 52 to 47 in the Senate and, with somewhat more of a margin, by 250 to 183 in the House of Representatives. Many of those who had voted in favor of the resolutions had done so tepidly, and there continued to be a recurrent call to let sanctions work. Protests were held across the United States, and large demonstrations against the coalition were held throughout Western Europe. George H. W. Bush looked lonely and isolated.
The deadline, January 15, came and went. There was no last minute maneuvering—but rather, a grim silence. The “pause of good will” had passed. Would the coalition make good on its authority? It was up to George H. W. Bush. Perhaps the President would let several weeks or even a month go by and allow sanctions to work further. On January 16, Bush talked with two clergymen. He had already publicly warned that if Iraq did not begin withdrawing, the coalition’s response to the Iraqi aggressions against Kuwait would be massive—and that it would be swift. And indeed it was. In the early morning hours of January 17, Gulf time, 700 coalition aircraft launched a huge assault on Iraq.
“The Mother of All Battles”
The Gulf Crisis had turned into a war after all, although as some pungently pointed out, the war had actually begun when Iraq had invaded Kuwait on August 2. The air war continued for a month, with systematic attacks on Iraqi command and control centers and a broad range of military and strategic targets. The biggest surprise, at least for the U.S. Air Force, was not that the coalition aircraft and missiles thoroughly knocked out Iraq’s air defense capability, but that they did it so easily and so quickly, with so minimal a loss of aircraft.
The scale and impact of the first night’s air assault was the key to the reaction in the oil market. At first word, the oil price did as might have been expected—spiked $10 a barrel, from $30 to $40. Within hours, however, it plunged $20—back toward $20 a barrel, below what it had been even prior to the invasion. The supply situation had continued to improve; there was no doubt that the Strategic Petroleum Reserve would be used if needed; demand was falling with the passing of the winter peak. Now the initial air attack appeared to have destroyed Iraq’s ability to impose any serious injury on the Saudi supply system. Fear was, thus, removed from the oil price, and the realities of physical supply and demand drove the price down. As a result, the oil price was simply taken off the table at the start of the war, something that would have been impossible two or three months earlier.
The Iraqis responded to the air war with an air war of their own—launching their modified Soviet Scud missiles against Israel and Saudi Arabia. The Iraqis may well have hoped that an attack on Israel would incite Israeli entrance into the war, which they were sure would split the Arab members from the coalition and create in particular an untenable situation for Saudi Arabia. Or perhaps, they could trigger an early initiation of the ground war by an ill-prepared coalition. But the Israelis, under great pressure, held their fire. The Scud attacks did inspire intense fear because of the thought that they would be carrying chemical weapons. But, as events turned out, they never did, and the actual devastation from the Scuds was limited.
As the air war continued, Saddam Hussein was promising that “the mother of all battles” would commence with the opening of hostilities on the ground. But when the ground war began five weeks after the start of the air battle, the predicted “mother of all battles” turned into a rout. The Iraqi soldiers were demoralized, ground down by the air war, restricted by doctrine, and not at all keen to sacrifice themselves to the glory of Saddam Hussein if they could avoid it.
Moreover, the allies had expertly applied deception. The U.S. commander in the Gulf, General Norman Schwarzkopf, kept a copy of a book by the German General Erwin Rommel on the table beside his bed. Rommel was not only the master of mobile warfare, but an expert on fighting in the desert—and he had learned firsthand, in North Africa, the strategic significance of oil. Schwarzkopf imbibed Rommel’s strategic lessons, and he had no intention of being drawn into a direct assault on Iraqi positions. “A war in the desert,” Schwarzkopf had observed, “is a war of mobility and lethality.” Schwarzkopf directed an extensive campaign, including training exercises, to convince the Iraqis that the allies would be attacking head on directly and with a huge amphibious assault. At the same time, substantial forces were being secretly moved far out into the Saudi desert, and, when the ground war began, they swung in a huge arc from the west, coming in behind the entrenched Iraqi positions and cutting them off. The ground war took no more than a hundred hours, and it ended with Iraqi forces in full retreat.5
But Saddam’s forces had already released what was by far the largest oil spill in history. And they now withdrew from Kuwait with vengeance and vindictiveness. If Hussein could not have Kuwait, he would try to destroy it. In contrast to Hitler’s troops who disobeyed the Fuehrer’s order in 1944 to set Paris afire as they departed, Hussein’s soldiers left Kuwait burning. Upwards of 600 oil wells were set aflame, creating a hellish mixture of fire and darkness and choking smoke and gross environmental damage. As much as six million barrels of oil a day were going up in flames—considerably more than Japan’s daily oil imports.
A cease-fire went into effect on February 28, 1991. Meanwhile, rebellions broke out among the Shias, in the southeast of Iraq, and in the north among the Kurds (whose homeland, owing to oil prospects, had been made part of Iraq when the country was invented in 1920). The two uprisings were now taking place in the regions where Iraq’s current oil production was concentrated. The Iraqis brutally put down the uprisings, although not before millions of people became refugees. The coalition’s forces had stopped short of Baghdad. The coalition partners had expected embittered military officers to quickly topple Saddam Hussein in a coup, but they had underestimated his grip on the country and his fanatical devotion to his own security. Despite all the devastation he had brought on his own country, Saddam Hussein clung to power in the aftermath of the Gulf War. But he no longer had an offensive military machine.
But was the Gulf Crisis really over?
The Lessons of Security
After the 1973 oil shock, it was clear that the oil companies could not and would not manage future crises by themselves, and that it was up to governments to take on that role. In the years after, the industrial countries developed an energy security system built around the International Energy Agency and the strategic stockpiles, such as the U.S. Strategic Petroleum Reserve and similar reserves in Germany and Japan and other countries, which can be brought into play to avert a shortfall and counteract a panic. The IEA provides a framework for coordinated response and for the exchange of timely, accurate information among nations—an absolute requirement to head off any such panic or prevent scrambles for supply. The years of oil crises demonstrated that, given time, markets will adjust and allocate. Those years also provided evidence that governments do well to resist the immediate temptation to control and micromanage the market. Of course, it is hard for governments to resist action when uncertainty is high, panic is building, and accusations are mounting.
Yet the course of the six major disruptions from the early 1950s through 1991 has revealed that the logistical and supply system can adapt to such an extent that the shortages ended up being less dire than had been expected. Indeed, the real problem in the 1970s turned out not to be an absolute shortage, but the disruption of the supply system and the confusion over ownership of oil, with the consequent rush to reorder the system under conditions of high uncertainty. And in 1990 and 1991, the lessons of previous crises, along with the mechanisms developed since the 1970s and improved information, made the impact of the disruption that came with the Gulf Crisis less serious than it might otherwise have been.
Even if experience points the way to better-managed reactions, there are other important questions. During the oil crises in the 1970s, the United States political system was paralyzed in the face of one of the biggest and most costly disruptions of the postwar era. Anger, finger-pointing, scapegoating—all became a substitute for the development of a rational reaction to a very serious problem. Watergate, of course, was part of the explanation. Still, the spectacle of that fragmented, contentious response, provided reason to ponder how, even after the Gulf Crisis, the United States would respond over the long haul to future energy needs and crises.
The Third Environmental Wave
Even as the world continued to move on oil and the economy to live on oil, a new challenge to Hydrocarbon Society emerged, this time from within, portending a great confrontation that would probably affect the oil industry and, indeed, our way of life in the years ahead. The industrial world was now facing a resurgent wave of the environmental movement. The first, in the late 1960s and early 1970s, focused on clean air and water and had a prominent “made-in-America” label on it. It had major energy implications, for it provided the impetus for the rapid switch from coal to fuel oil, which was one of the main forces that tightened the world oil market so quickly, setting the stage for the 1973 crisis. During the 1970s, as security came to the fore and hard economic times led to renewed emphasis on jobs and economic performance, the environmental movement lost some of its momentum. In a second wave, it was more narrowly focused, with much concentration on slowing or stopping the development of nuclear power. It succeeded in so doing in most of the major industrial countries, decisively altering what had been assumed to be the major path of response to the oil crisis.
A powerful third wave began to rise in the 1980s. It engendered wide support, cutting across traditional ideological, demographic, and partisan differences. It was an international phenomenon, born as much in Europe as in North America, whose concerns include every environmental hazard from the depletion of the tropical rain forests to the disposal of waste products and—increasingly—climate change.
Perhaps the single decisive event that catalyzed the new wave of environmentalism had its beginnings in April 1986, when operators of a nuclear reactor in Chernobyl, in Ukraine, in the Soviet Union, lost control. The reactor itself was consumed in a partial nuclear meltdown, and clouds of radioactive emissions spewed forth and were carried by winds across vast stretches of the European continent. The initial reaction of the Soviet government was denial, denouncing the reports of a nuclear disaster as a creation of malevolent Western media. As the days went by, however, rumors reached Moscow of riots at the train station in Kiev, of mass evacuations, of deaths and disaster. International criticism mounted. Still, a blanket of silence was maintained, fueling speculation about horrible disasters. Finally, more than two weeks after the accident, Mikhail Gorbachev went on television. His speech was wholly uncharacteristic of Soviet leadership and represented a sharp break with the way the Kremlin had traditionally communicated with its own people and the rest of the world. There was no propaganda, no denial, in the speech; instead, it was a serious, somber admission that a grave accident had indeed occurred, but steps were now under way to control it. Only then did the Soviet people and the rest of the world realize how incredibly dangerous the first few days had been. Some in the Soviet leadership would afterwards say that Chernobyl had been a major political turning point within the USSR for glasnost and perestroika. Those in Western Europe who had blamed all environmental ills on Western capitalism were forced to rethink their ideology. In both Eastern Europe and the Soviet Union, environmentalism became one of the most important rallying points for opposition to communism, and with good reason. For with the parting of the Iron Curtain, it was revealed that among the leading legacies of cynical communist rule was a frightening pattern of environmental degradation and disasters, some of them perhaps irreversible. Environmental considerations are proving to be among the top issues for the new democratic governments of Eastern Europe.
Chernobyl, with its threat of invisible but deadly danger and its warning of technology out of control, provided a great thrust to the new wave of environmentalism. It helped trigger the “green” movement in Europe. In the United States, the Clean Air Act of 1990 was a landmark in terms of controlling air pollution and smog. But already, a broader—indeed, a global—environmental agenda was beginning to emerge around climate change and global warming.
Yet the 1990s had begun not with another environmental drama, but rather with a struggle over the oil resources of the Persian Gulf, on which the world was again becoming heavily dependent. The Gulf Crisis thrust energy security back onto the political agenda, spurring governments to focus anew on ensuring supplies. But that quest for security would increasingly coexist—and sometimes seem to be at odds—with the third wave of environmentalism.
The Age of Oil
The cry that echoed in August of 1859 through the narrow valleys of western Pennsylvania—that the crazy Yankee, Colonel Drake, had struck oil—set off a great oil rush that has never ceased in the years since. And thereafter, in war and peace, oil would achieve the capacity to make or break nations, and would be decisive in the great political and economic struggles of the twentieth century. But again and again, through the never-ending quest, the great ironies of oil have been made apparent. Its power comes with a price.
Over its entire history as an industry, oil has brought out both the best and worst of our civilization. It has been both boon and burden. Energy is the basis of industrial society. And of all energy sources, oil has loomed the largest and the most problematic because of its central role, its strategic character, its geographic distribution, the recurrent pattern of crisis in its supply—and the inevitable and irresistible temptation to grasp for its rewards. This history has been a panorama of triumphs and a litany of tragic and costly mistakes. It has been a theater for the noble and the base in the human character. Creativity, dedication, entrepreneur-ship, ingenuity, and technical innovation have coexisted with avarice, corruption, blind political ambition, and brute force. Oil has helped to make possible mastery over the physical world. It has given us our daily life and, literally, through agricultural chemicals and transportation, our daily bread. It has also fueled the global struggles for political and economic primacy. The fierce and sometimes violent quest for oil—and for the riches and power it conveys—will surely continue so long as oil holds a central place. For ours is a civilization that has been transformed by the modern and mesmerizing alchemy of petroleum. This is what has made it the age of oil.