Oil Dependence and Foreign Policy

Historically U.S. foreign oil dependence has been associated with other costs, as well. U.S. military spending generally increases as U.S. forces are called on to respond to political instability in the oil-producing nations on which the United States relies for energy supplies. Critics of U.S. military spending and foreign oil dependence have suggested that the 1990s U.S. military intervention in Iraq's invasion of Kuwait was driven by a desire to protect oil production in Kuwait and to prevent Iraq from further threatening U.S. oil imports by invading Saudi Arabia, a major supplier of U.S. oil.

Others have alleged that the United States-led invasion of Iraq in March 2003 had less to do with suspected Iraqi holdings of weapons of mass destruction than with an apparent Iraqi plan to begin accepting euro dollars (the currency of the EU) for its oil exports. There were also reports that Iraq intended to open an international oil exchange market for trading oil in euros—a move that might have been devastating to the value of the U.S. dollar.37

Whether these claims are true, there are undeniable connections among U.S. foreign relations, oil issues, and the stability of the U.S. economy. For example, political instability in one of the United States' top suppliers of oil, Venezuela, has had noteworthy effects on the U.S. economy. Venezuela sends close to 70 percent of all its oil exports to the United States, according to the EIA. In 2003 U.S. oil prices soared after Venezuelan oil workers went on strike at the end of 2002 as part of a national revolt against the nation's leader, Hugo Chavez. Some politicians have cautioned that U.S. dependence on oil from the Middle East and politically unstable countries such as Venezuela may give political leaders in these regions undue leverage over U.S. foreign and defense policy.

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