Discussion Paper - Caspian Studies Program

U.S. Policy on Russian and Caspian Oil Exports: Addressing America's Oil Addiction

| June 30, 2002

On April 8, 2002— the same day that Iraq instituted an oil export embargo and only weeks after the U.S. Senate rejected new fuel efficiency standards for automobiles— students in my "Central Issues of American Foreign Policy" course at the Kennedy School of Government were in the middle of presenting policy recommendations to address America's "addiction to oil."

In response to a case study I prepared in conjunction with the Caspian Studies Program, sixty-five students considered different policy options designed to lessen America's vulnerability to a disruption in petroleum supplies. At present, the United States consumes 19.7 million barrels of oil a day— which equals almost 3 gallons of gas for every person in the United States— and accounts for over 25 percent of all global oil consumption. The United States currently relies on foreign producers to provide over half of the oil it uses every day, and this figure is expected to climb to two-thirds by 2020. OPEC countries— including Saudi Arabia, Iraq, and Iran— have the largest untapped petroleum reserves in the world and are in a position to take a bigger share of the growing energy market in the future.

This case study was designed to make students think about America's energy policy from both a supply and demand perspective, and in foreign and domestic contexts as well. On the supply side, students had to consider how foreign oil producers outside of OPEC— particularly in the oil-rich Caspian basin countries of Russia and Kazakhstan— might help address the United States' growing petroleum needs over the coming decades. Students ultimately had to answer whether or not the United States' attempts to promote better relationships with a greater number of oil producers would significantly reduce America's vulnerability to a disruption in petroleum supply.

This case also required students to evaluate the various domestic policy options available to help address the United States' growing energy concerns. These options include an array of choices ranging from increasing automobile fuel efficiency standards, to offering tax credits for hybrid vehicle research and development, to drilling in the Arctic National Wildlife Reserve (ANWR). The class quickly realized that any attempt to change U.S. energy consumption patterns, however, will encounter opposition from powerful political groups"most significantly, opposition from the American consumer.

We are now presenting this same challenge to you. How will the United States address its addiction to oil over the next several decades? For your consideration, we have included the original case study, a list of relevant reading material that the students used in preparing their answers, an example of some student answers, as well as an illustrative "answer" to this question. Some of the terminology students used in writing their policy memos and their hierarchical breakdowns of U.S. policy priorities are part of the policy training that they receive at the Kennedy School.

Questions about the United States' energy dependence and about emerging oil producers in former Soviet states will continue to spark debate— at the Kennedy School certainly, but also among oil executives in Houston, automakers in Detroit, and policy makers in Washington. This debate will continue to be one of the more important discussions in American policy circles for many years to come.

-- Graham Allison
Douglas Dillon Professor of Government
Director, Belfer Center for Science and International Affairs
Chair, Caspian Studies Program
Harvard University



For more information on this publication: Please contact the Belfer Communications Office
For Academic Citation: Allison, Graham and John Grennan. “U.S. Policy on Russian and Caspian Oil Exports: Addressing America's Oil Addiction.” Discussion Paper, Caspian Studies Program, June 30, 2002.