Issues in International Oil Policy

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OVER the past decade, the economic growth of the industrialized West has been based in large measure upon a prodigious expansion in sources of energy. Oil has made the largest single contribution to that expansion; and the stepped-up consumption of oil has been especially marked among basic industries engaged in production and transport. In consequence, Western industry has become increasingly dependent upon an uninterrupted flow of oil. Since the end of World War II, Europe has been drawing more and more heavily upon Middle East oil to meet its requirements. But mounting tensions in the Middle East, arising from aggressive nationalism, the deterioration of British political authority and Soviet expansionist tendencies, put Europe's access to these critical supplies in jeopardy. The Suez crisis has driven these points home as no argument or previous circumstance could.

I. THE SUEZ CRISIS AND EUROPE'S OIL

Just a few figures will highlight the proportions of the current crisis for Western Europe. Europe's oil requirements last year were running at about 3,000,000 barrels daily. Imports from the Middle East amounted to 2,100,000 barrels per day, or 70 percent of European requirements. In contrast, crude oil production in Western Europe itself came to a bare 200,000 barrels. The balance of its needs was largely met by crude and product imports from the Western Hemisphere.

These oil supplies accounted for almost 20 percent of the total energy utilized by Europe. The relative importance of oil as a source of energy varies, of course, from country to country. The United Kingdom, for example, with relatively high coal production, relies on oil for only 13 percent of its energy needs. Sweden, on the other hand, depends on oil for about 45 percent of its energy needs. For Europe as a whole, each 5 percent shortfall in its oil supplies is the equivalent of a 1 percent decline in total energy availability...