Impotence of oil companies. [Situation in Saudi Arabia]

Journal Article · · Foreign Policy; (United States)

OSTI ID:7309290

Church, F

Lacking direction from U.S. economic policy, American oil companies may already have an irreversible stake in Saudi Arabia. U.S. policy decisions must determine who is to represent national interests if the oil companies are no longer susceptible to American foreign policy. The U.S. began using oil companies to influence Middle East supplies in 1947 in the formation of the Arabian American Oil Co. (Aramco), a monopoly that worked to U.S. advantage. Foreign tax credits began in 1948 to grant more cost-free revenue to shiekdoms in return for political stability. The use of oil companies to achieve foreign policy goals was based on the assumption that national and corporate interests were identical. A review of developments during the 1950s to 1970s covers the emergence of the Organization of Petroleum Exporting Countries (OPEC) as a dominant force and U.S. government actions which divided and aroused suspicion among the oil companies. During the 1973 oil embargo the companies, involved in administering the embargo, were also consolidating their multinational relationships. Saudi Arabia's decision to act independently of the cartel in setting prices revealed the position of American companies in marketing Saudi Arabian oil to be that of ineffective negotiators on behalf of consumer nations. U.S. policy needs call for an assessment of geopolitical issues, an arrangement with major oil producers for long-term supplies, and a restructuring of tax credit incentives. (DCK)

• Research Organization: Senate, Washington, DC
• OSTI ID: 7309290
• Journal Information: Foreign Policy; (United States), Journal Name: Foreign Policy; (United States) Vol. 27; ISSN FRPLA
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
020700 -- Petroleum-- Economics
Industrial
& Business Aspects
021000 -- Petroleum-- Legislation & Regulations
29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
294002* -- Energy Planning & Policy-- Petroleum
AGREEMENTS
ASIA
AVAILABILITY
ECONOMIC IMPACT
ECONOMIC POLICY
ECONOMICS
ENERGY DEPENDENCE
ENERGY SUPPLIES
FINANCIAL INCENTIVES
FOREIGN POLICY
GOVERNMENT POLICIES
INDUSTRY
INTERNATIONAL AGREEMENTS
INTERNATIONAL COOPERATION
INTERNATIONAL ORGANIZATIONS
MARKET
OIL-IMPORTING COUNTRIES
OPEC
PETROLEUM INDUSTRY
SAUDI ARABIA
TAXES
TRADE