Introduction
Oil and Strategy
The struggle for oil has been at the center of international politics since the beginning of the twentieth century. Securing oil—or, more precisely, access to it—has also been at the heart of many great powers’ grand strategies during that time, particularly those in oil-poor Europe. The Continent’s geographical and geological endowments, particularly its rich coal seams, had facilitated its rise to global predominance following the conquest of the New World and the start of the Industrial Revolution, but they conspired against it during the Age of Oil. Rather than accept their relegation to second-tier status, Britain and Germany developed elaborate strategies to restore their energy independence. These efforts wound up compromising their security by inducing strategic overextension—for Britain in the Middle East, and for Germany in the Soviet Union—thereby hastening their demise as great powers. For these reasons, the history of oil is also a chapter in the story of Europe’s geopolitical decline.
While the control of oil is often an objective in great power politics, it is easy to overlook how the varying availability of oil among the great powers affected both the development of strategy and its execution. Of course, no serious scholar or analyst can “support the proposition that only natural resources structure the underlying competition among nations.”1 There is little evidence that nations fight wars over oil simply for its own sake.2 Nevertheless, oil commands our attention in ways that no other commodity does, because ample supplies are indispensable for every nation’s war machine and civilian economy. When nations go to war for oil, what they are actually fighting for is the capability to accomplish tasks that require oil. Great powers—no matter how brutal—cannot hope to translate their political ambitions into reality without oil. In 1942, to cite one example, “as Nazi planners worked furiously to realize the economic and racial goals associated with Lebensraum,” the fate of the German war effort depended upon seizing the oil of the Caucasus, “without which the grand Nazi schemes would be mere chimeras.”3
1 Alfred Eckes, United States and the Global Struggle for Minerals (Austin: University of Texas Press, 1979), ix. Emphasis in the original.
2 Emily Meierding, “Dismantling the Oil Wars Myth,” Security Studies 25: 2 (2016): 258–88.
3 Stephen Fritz, Ostkrieg: Hitler’s War of Extermination in the East (Lexington: University Press of Kentucky, 2011), 230–9 (quotation from p. 236).
The study of the geopolitics of oil begins with World War I.4 One of the factors that made this conflict so destructive was the blending of two earlier developments in warfare. The first was the “people’s war” that first emerged during the Wars of the French Revolution, when states mobilized nationalist passions to wage unlimited war. The second was the “industrial war” of the second half of the nineteenth century, when soldiers grasped the fruits of the Industrial Revolution, including railways, telegraphs, and mass-produced weapons, to enhance the effectiveness of large conscript armies. During the latter period, coal was king. It was essential to the production of intermediate goods such as steel and dominated the market for propulsion fuels both on land (railways) and at sea (ships). By contrast, oil’s chief purpose was as a source of illumination. That changed with the development of the internal combustion engine around the turn of the twentieth century and the decision of the Royal Navy, followed shortly thereafter by the United States, to convert its battle fleet to burning oil exclusively in 1912, both of which paved the way for oil to supplant coal as the world’s premier propulsion fuel.
Between 1914 and 1918, oil revolutionized the conduct of war. Although the Allies won World War I using weapons dating from the nineteenth century, the conflict inaugurated a “military revolution” at the social, political, and technological levels that spawned “revolutions in military affairs” at the operational and tactical levels. Before the war had even ended, oil had transformed military operations and strategy, and compelled nations to adjust their force structures, military plans, and strategies.5 Many of the weapons platforms we associate with modern conventional warfare emerged during this conflict, including tanks, trucks, aircraft, and submarines. All of these platforms required petroleum products either as a fuel or for lubrication. Oil was not yet vital to the civilian economy, and it did not replace coal as the world’s largest source of energy until the 1960s.6 Nevertheless, by 1918, modern war economies could not function without sufficient supplies of oil for sectors such as heavy industry, transportation, petrochemicals and even agriculture, where mechanization compensated for the manual labor drafted into the military or the factories. While oil played a contributing rather than a decisive role in the outcome of the conflict—horses were at least as significant, as the British shipped more fodder to their army in France than any other item—all of the participants understood that a profound change was occurring.7
There was considerable debate over the wisdom of embracing oil before 1914, but few expressed any hesitation after the Great War. On land, oil offered soldiers the tools to transcend the tyranny of firepower and fixed fortifications by restoring
4 The following discussion draws from: Williamson Murray and MacGregor Knox, “Thinking about Revolutions in Warfare,” in: The Dynamics of Military Revolution, 1300–2050, ed. Knox and Murray (New York: Cambridge University Press, 2001), 1–14.
5 David Deese, “Oil, War, and Grand Strategy,” Orbis 25: 3 (1981): 526ff.
6 Bruce Podobnik, Global Energy Shifts: Fostering Sustainability in a Turbulent Age (Philadelphia: Temple University Press, 2006), 4–5; Raymond Stokes, “Oil as a Primary Source of Energy,” in: 1956: European and Global Perspectives, ed. Carole Fink, Frank Hadler, and Tomasz Schramm (Leipzig: Leipziger Universitätsverlag, 2006), 245–64.
7 James Laux, “Trucks in the West during the First World War,” Journal of Transport History 6 (1985): 69.
mobility to the battlefield using combined arms to shatter an enemy’s lines and exploit a breakthrough. In the air, oil enabled the creation of an entirely new domain of warfare through the invention of heavier-than-air aircraft, which could support operations on land and sea or operate independently by striking an enemy’s airfields, cities, and economic infrastructure. At sea, oil propulsion enhanced the range and lethality of surface combatants, enabled the development of submarines, and facilitated the development of naval aviation using aircraft carriers. The net effect across all of these domains of war was the enhancement of countries’ ability to project power rapidly over vast distances.
The emergence of this internal combustion-propelled triad of vehicles, aircraft, and naval vessels ensured that the next war would be an “oil war.” Even as the Great War reached its bloody crescendo in 1918, the leaders of the great powers adopted strategies to secure future oil supplies. It is not clear that they had a choice. Absent oil, as one German official remarked in 1918, “there is no militarily secure independence, no global relevance.”8 Success in war, other influential analysts surmised afterward, would hinge upon having ample supplies of oil from the start of hostilities.9 The prize was nothing less than “world hegemony,” which, the German Foreign Office concluded in 1921, depended on having “oil hegemony” as well.10
Throughout the interwar period, oil permeated geopolitical discourse.11 Soviet dictator Josef Stalin declared in 1925 that “oil is the vital nerve of the struggle among the world states for supremacy both in peace and in war.”12 His fascist opponents concurred: “The struggle of world politics,” one German military journal concluded in 1934, “is today more or less a struggle over oil.”13 Another declared the following year that “today, all of European politics, even world politics for that matter, is geared decisively toward oil interests.”14 These were obviously oversimplifications, since oil did not create interstate or ideological competition after the Great War. Nevertheless, oil was transforming the balance of power in subtle yet profound ways. After World War I, one scholar argues, “[the] global balance of power began to reflect the distribution of indigenous oil resources, access to foreign oil . . . and competition and potential conflicts over oil-bearing territory.” Oil was now at the heart of the most important tasks of any strategist, including “[defining] vital interests [developing] alliance and arms-transfer policies, the selection and design of national force structures, and the decision to initiate or enter international conflict of war.”15
8 Stuchlik, “Die Wirtschaftliche Bedeutung [. .],” 1918, Bundesarchiv, Berlin-Lichterfelde (BA-B), R 3101/884.
9 Fritz Fetzer, Ölpolitik der Großmächte unter kriegswirtschaftliche Gesichtspunkten: Das japanische Beispiel (Hamburg: Hanseatische Verlagsanstalt, 1935), 7–8.
10 Note to Wirkl and Bücher, January 20, 1921, Politisches Archiv des Auswärtigen Amtes (PAAA), R 118173.
11 “Kriegsfolgen [. . .],” Vierjahresplan, 1942/III.
12 “Political Report [. .],” December 18, 1925, accessed August 15, 2018, <https://www.marxists. org/reference/archive/stalin/works/1925/12/18.htm>.
13 Roesner, “Die Treibstoff-Frage [. .],” Militär-Wochenblatt (May 25, 1934).
14 Bronk, “Deutschlands Erdöl-Selbstversorgung [. .],” Militär-Wochenblatt (October 25, 1935).
15 Deese, “Grand Strategy,” 526–7.
SAUDI ARABIA
Map 1. Oilfields, Pipelines, and Refineries of the Middle East, no date (circa 1943)
Source: NARA, RG 107, Entry 141, Box 251.
Kermanshah
Horfo
Rutba
Haditha
The century before, the introduction of coal-powered steam engines aboard ships had radically affected geopolitics by freeing naval and merchant vessels from the vagaries of wind. This, in turn, restored the historical “transcendence” of some regions (the Mediterranean), elevated backwaters to prominence while relegating once significant arteries to secondary status (the Strait of Malacca at the expense of the Sunda Strait), opened new trade routes (Cape Horn), and sparked another global spasm of imperialist competition.16 Oil prompted a similar rewriting of global political geography that has persisted to this very day. Besides benefiting oil-rich powers such as the United States and the Soviet Union, the rise of oil also gave a few developing nations in what came to be known as the “Global South” immense geopolitical significance as oil producers. No region was affected more than the Middle East. Already the “ ‘Clapham Junction’ [hub] of British imperial communications” since the nineteenth century, the Middle East became doubly important as an oil supplier and transit route for tankers or pipelines (see Map 1).17
WHY OIL?
Oil is not the only commodity crucial to a modern economy or war machine, but its peculiar characteristics—especially the circumstances under which the oil industry operates and the nature of production and consumption—sometimes make acquiring adequate and secure supplies more challenging than is the case with many other key commodities. Consider, by way of example, a bulk ore such as bauxite or metals such as chromium, copper, and nickel. As with oil, industrialized countries require vast quantities of bauxite for aluminum production that are too large to stockpile. Unlike oil, however, during the 1930s, supplies of bauxite were both plentiful and dispersed worldwide, including Europe, and traded for either hard or soft currency (currencies that are or are not freely convertible). Supplies of chromium were geographically concentrated like oil and purchasing them required hard currency, but unlike either oil or bauxite, chromium could be stockpiled for military purposes, and Germany entered World War II with a twoyear supply.18 As for nickel or copper, there was no need to stockpile—the Germans could instead recycle prefabricated goods made with copper to supplement their domestic production. Nickel was trickier—90 percent of prewar production was unavailable to Germany due to blockade. Berlin devised an ingenious response—it pulled its nickel coins from circulation after World War II began. Germany thereby doubled its prewar stockpile and, by combining this with conservation measures, survived the conflict without any major shortage.19
16 Bernard Brodie, Sea Power in the Machine Age (New York: Greenwood, 1969), 105–10.
17 John Darwin, “An Undeclared Empire: The British in the Middle East, 1918–39,” in: The Statecraft of British Imperialism: Essays in Honor of Wm. Roger Louis, ed. Robert King and Robin Kilson (London: Frank Cass, 1999), 160.
18 Alan Milward, “The Reichsmark Bloc and the International Economy,” in: Aspects of the Third Reich, ed. H.W. Koch (New York: St. Martin’s, 1985), 346–9.
19 John Perkins, “Coins for Conflict: Nickel and the Axis, 1933–1945,” Historian 55 (1992): 85–100.
Neither Britain nor Germany could resort to such gimmicks to satisfy their oil requirements in wartime. Before the discovery of North Sea oil in the 1969, Britain’s only significant source of petroleum was Scottish oil shale, production of which was hideously inefficient. Shale production during World War I averaged 3,000,000 tons per annum, but since the output of crude oil per ton of shale had declined by a quarter between 1886 and 1918 (from 31.2 imperial gallons to 23.0 gallons), the total quantity of refined petroleum was under 300,000 tons.20 As for Germany, it produced only 8 percent of its total oil consumption during World War I (418 tons versus 5,290 tons)—40 percent of which came from Alsace-Lorraine, which returned to France under the Treaty of Versailles, with the remainder from around Hannover.21
Oil shortages were not the only similarity. Britain and Germany also suffered from current account deficits—the sum of their trade balance plus net foreign investment income and transfers. Britain began running trade deficits in the 1880s, and World War I depleted its reserves of foreign exchange (convertible, “hard” currencies such as U.S. dollars or gold) and securities (stocks and bonds). In Germany’s case, rearmament after 1933 stimulated demand for imports while reducing export surpluses, thereby starving Germany of the foreign exchange it needed to import oil. Even if both nations abjured any aspirations to great power status, in a world where the United States dominated the global oil trade, their capacity to import oil was still constrained by their foreign exchange position. Not surprisingly, independence for both Britain and Germany also meant purchasing oil whose price or currency they controlled.
Perhaps most striking, however, was both nations’ persistence in pursuing independence irrespective of the costs. Changes in government or regime type sometimes affected the tactics but never the underlying aims or strategies. Although the Conservative Party dominated British politics during the twentieth century, a Liberal government first embraced oil as a matter of national security before 1914 and established the framework for Britain’s postwar strategy in 1916. The interwar Labour governments avoided confrontation with the United States and France but they did not question the assumptions of British oil policy or challenge their predecessors’ strategy. Meanwhile, the first tentative steps toward building a synthetic fuel industry to make Germany independent of oil imports took place during the Weimar Republic. The rise of the Third Reich led to a readjustment of German aims—from domestic stabilization to a genocidal war of conquest—but not to the mechanisms of Germany’s energy strategy.
What explains this remarkable consistency? The answer, of course, is World War I. Britain and Germany drew the same lessons from that conflict with regard to oil. Not only did they need it, and in much greater quantities than heretofore, but they had to look for it beyond their borders. The war had revealed that a “general conflict could no longer be resolved with reference to European resources alone,” and victory had gone to the side that had made greater use of assets beyond
20 Department of the Interior, Oil Shale: An Historical, Technical, and Economic Study (Washington, DC: GPO, 1924), 55–7.
21 Ferdinand Friedensburg, Erdöl im Weltkrieg (Stuttgart: Ferdinand Enke Verlag, 1939), 73.
Europe, whether from their overseas empires or the budding superpower on Europe’s periphery—the United States.22
British and German aims—energy independence—were identical, but the divergent strategies they adopted were byproducts of their peculiar circumstances as either a maritime or a continental power. Although a disruptive enterprise in general, the Great War had validated a set of prewar assumptions in both countries. In Britain’s case, the need to preserve secure sea lines of communication remained paramount. In Germany, it became clear that the only surefire way to augment the nation’s economic strength was through “continental expansion and economic integration” of adjacent regions.23
Britain’s primary instruments were its navy and major oil companies—specifically, the Anglo-Persian Oil Company (Anglo-Iranian Oil Company after 1935) and the Royal Dutch/Shell Group.24 Whitehall had a 51 percent stake in the former since 1914, while the latter was the product of a 1907 merger between the Royal Dutch Petroleum Company and the Shell Transport and Trading Company. The resulting group was 60 percent Dutch-owned but still British in outlook.25 Together, Anglo-Persian and Shell possessed valuable concessions throughout the Western Hemisphere, the Middle East, and East Asia, as well as sophisticated marketing and transportation networks. As of 1927, Shell produced 50 percent more oil than either of its two closest competitors, Standard Oil Company of New Jersey (Jersey) and Gulf Oil: 314,200 barrels per day (bpd) versus 214,700 and 212,500 bpd, respectively. It also had more tankers than Jersey and Gulf combined (156 versus 123).26 Anglo-Persian was the smallest of the major oil companies, but it had a monopoly over some of the richest oilfields in the world. Its assets more than doubled between 1920 and 1927 from $110 million to $248 million, whereas those of Shell increased by only 50 percent (from $320 million to $480 million).27
Until World War II, Shell and Anglo-Persian/Anglo-Iranian produced more oil beyond the United States than every U.S. oil company combined did. In 1929, the former possessed 41 percent of world oil production outside of the United States (541,200 bpd), while the U.S. companies produced only 29.7 percent (392,000 bpd). Ten years later, Shell and Anglo-Persian still controlled 35.7 percent of global production beyond the United States (795,300 bpd), while the U.S. share had declined to 24.9 percent (554,800 bpd).28
22 Ian Lesser, Resources and Strategy (Basingstoke: Macmillan, 1989), 41–6 (quotation from p. 46).
23 Lesser, Resources, 46. Emphasis in original.
24 Major companies are vertically integrated firms with their own oilfields, transportation infrastructure, refineries, and marketing networks. Independent companies focus on one or more of these business areas.
25 Shell, “Memorandum,” January 16, 1940, British National Archives (BNA), CAB 63/117.
26 Jersey, which lost most of its upstream assets after the U.S. Supreme Court broke up the Standard Oil Company in 1911, caught up with Shell in 1935 at 560,000 bpd. Joost Jonker and Jan Luiten van Zanden, From Challenger to Joint Industry Leader, 1890–1939, vol. 1 of History of Royal Dutch Shell (Oxford: Oxford University Press, 2007), 224–5, 437.
27 R.W. Ferrier, Developing Years, 1901–1932, vol. 1 of History of the British Petroleum Company (Cambridge: Cambridge University Press, 1982), 543.
28 Mira Wilkins, Maturing of Multinational Enterprise: American Business Abroad from 1914–1970 (Cambridge: Harvard University Press, 1974), 241.
Considering the tools at its disposal—aggressive companies, a sprawling empire, and a powerful navy—it should come as no surprise that Whitehall saw energy independence as a viable objective. Even if Britain had to import all of the oil it consumed, few countries were better equipped to import large quantities from overseas. Assuming secure sea lines of communication, Britain’s supply position was enviable comparted to its most likely adversaries after 1918.29
That did not mean that Whitehall’s task was a simple one. First on the list of concerns was the question of whence Britain should draw its oil. The menu of options was rather limited in the aftermath of World War I—the only significant sources were the United States, Russia, and Mexico (see Maps 2 and 3). War-torn, revolutionary Russia was out of the question. Another option was the Western Hemisphere, especially Latin America, where British firms had a long history, but it was not the ideal source of supply politically. Mexico was also in the throes of revolution, and Latin America now lay within the U.S. orbit. Starting in 1914, Whitehall expressed a preference for sources under British political control. Ideally, this would have meant from areas within the British Empire, but unfortunately imperial oil production was negligible, too far away from Britain to be transported at a reasonable cost, and often indefensible in the event of war.
There was, however, one further alternative that offered the prospect of ample oil supplies under British control—the Middle East. Thanks to the efforts of generations of civil servants, soldiers, academics, and merchants, the region was not exactly terra incognita—Britain had already established an extensive presence there before World War I to support the Ottoman Empire, contain rival powers such as Russia, and preserve lines of communication to India and the Far East, especially the Suez Canal. Drawing oil from the Middle East therefore supplemented rather than complicated Britain’s strategic posture. If anything, oil kept Britain ensnared in the Middle East even as the imperial rationale for being there evaporated with the waning of British trade to India in the 1930s.30
In hindsight, Britain’s decision to seek the bulk of its oil supplies from the Middle East appears a foregone conclusion, but at the time, it was a gamble. We should not confuse today’s oil industry with the one that existed before 1945. At that time, the center of production was North America, which accounted for more than 80 percent of the world’s oil in 1918—and by North America, we mean the United States. While this book focuses on the challenges that confronted Britain and Germany, the United States was never entirely out of the picture, since it provided the benchmark against which rival great powers had to measure themselves in the Age of Oil. No country or even group of countries, such as the Organization of Petroleum Exporting Countries (OPEC), has ever possessed the sort of commanding position the United States enjoyed during the first half of the twentieth century (see Illustration 1). Its land mass dwarfed the potential oil-producing regions of the Middle East (see Map 4). Before World War II, the U.S. share of annual global output and accumulative production throughout world history was
29 Brodie, Sea Power, 117–18.
30 B.R. Tomlinson, Political Economy of the Raj, 1914–1947 (London: Macmillan, 1979), 44ff.
SIBERIA
SOUTH PA CIFIC OCEAN NOR TH CIFIC OCEAN
SOUT H AMERIC A
SOUTH AT LA N TIC OCEAN INDIAN OCEAN
Map 2. Shares of World Oil Production, 1917
Source: NARA, RG 107, Entry 191, Office of the Assistant Secretary for War, Planning Branch (Entry 191), Box 100.
BERING SEA
NOR THP A CIFIC OCEAN
HAWAIIAN IS
NOR TH AMERIC A
GREENLAND
SOUTH PA CIFIC OCEAN
NOR TH AT L ANTIC OCEAN
SOUT H AMERIC A
SOUTH AT LA N TIC OCEAN
SIBERIA
EU RO PE AU ST RALI A AFRI CA
PHILIPPINE IS
INDIAN OCEA N
Indicates relative magnitude of reserve of a producing field.
Indicates relative magnitude of reserve of a prospective field. Prospective field whose importance is uncertain because of inadequate data.
Orders of magnitude for producing and prospective fields.
Map 3. Shares of World Oil Reserves,
1917
Source: NARA, RG 107, Entry 191, Box 100.
EASTERN HEMISPHERE
WESTERN HEMISPHERE
UNITED STATES
Illustration 1. “World Crude Oil Production,” 22 February 1945
Source: Library of Congress (LOC), Harold L. Ickes Papers, Box 221.
more than 60 percent (see Illustration 2). The United States was equally strong in refining, with a capacity twice as great as the rest of the world combined (see Illustration 3). By comparison, the Middle East was a mere sideshow, with only 6 percent of world production and 7 percent of refining capacity before 1939 (see Illustration 4).31 The British were nevertheless convinced that the future of the oil industry lay in the Middle East (see Illustration 5). By the late 1930s, British planners expected that Iran alone would supply roughly 40 percent of the empire’s annual oil requirements in wartime. The security environment also looked promising. Although British commitments in the Middle East had expanded considerably, World War I had eliminated every great power rival to British predominance in the region except the United States, while Britain had little to fear from any local power. Of course, controlling oilfields was useless if Britain could not get the oil to consumers. The British learned the hard way that, in wartime, “the only oil reserve worth defending is that which can be held with a minimum of defensive military commitments.”32 After 1935, after Italy became a likely adversary, Britain could neither guarantee the security of its sea lines of communication in the Mediterranean, nor procure enough tankers to redirect supplies around the Cape of Good Hope.
31 Besides the various illustrations, the preceding statistics are drawn from: DeGolyer and MacNaughton, Twentieth Century Petroleum Statistics: Historical Data (Dallas: DeGolyer and MacNaughton, 2004), 3–4, 9, and 12.
32 Bernard Brodie, “American Security and Foreign Oil,” Foreign Policy Reports 23: 24 (March 1, 1948): 301.
Map 4. Aerial Comparison of Major Oil Concessions in the Middle East against the United States, no date (circa 1939/41)
Source: NARA, RG 107, Entry 141, Box 251.
Illustration 2. “World Consumption vs. World Production [of] Petroleum,” 1938
Source: National Archives and Records Administration (NARA), Record Group 107: Records of the Office of the Secretary of War (RG 107), Entry 141, Office of the Under Secretary for War, Administrative Office, Classified Decimal File (Entry 141), Box 251.
The only alternative was to import from the Western Hemisphere, primarily from Venezuela and the United States. This imposed ruinous economic costs since Britain was short of foreign exchange to pay for these imports.
Germany’s rationale for embracing energy independence was a reflection of the dilemmas it confronted as a resource-poor, continental power. Although it had been at the forefront of the second Industrial Revolution, Germany was short of many important raw materials, including oil, copper, rubber, nickel, manganese, tungsten, chromium, and bauxite. Following the loss of Lorraine in 1918, it was also bereft of high-quality iron ore.33 One of the few natural resources it did have in abundance, however, was coal. Before World War I, the discrepancy between its industrial might and weak raw materials position contributed to the development of both a dynamic export sector and an aggressive foreign policy. 34 Wartime defeat and the swift
33 R.L. DiNardo, Germany’s Panzer Arm (Westport: Greenwood Press, 1997), 6–7.
34 Peter Hayes, “Carl Bosch and Carl Krauch: Chemistry and the Political Economy of Germany, 1925–1945,” Journal of Economic History 47: 2 (1987): 353.
