0
Ve
The special
case of
Venezuela?
American Foreign Policy
and Energy Security
Ellen Ringnalda
University of Groningen 31 August 2012
“The internal stability of US suppliers, the way they manage their oil revenues,
the influence they exercise over US friends and allies, and their vulnerability to
acts of terrorism all are critical factors for US energy and national security. […]
Achieving energy security depends more than ever on the conduct of American
foreign policy.”
-INTRODUCTION ... 1
Research question and sub-questions ... 2
The choice for Venezuela ... 4
Relevance of this research ... 5
THEORIES... 7
Julien Mercille’s ‘radical geopolitics of US foreign policy’ ... 7
APERC’s four aspects of energy security ... 9
1. VENEZUELA AND AMERICAN ENERGY SECURITY ... 15
Introduction ... 15
American energy security ... 15
APERC’s four aspects of energy security ... 16
Availability ... 16 Accessibility ... 17 Economic ... 17 Political... 20 Regime stability ... 23 Diversification ... 23
State-owned Oil Companies ... 24
The ‘oil weapon’ ... 25
Geographical / technological ... 26 Workforce ... 26 Acceptability ... 27 Environmental ... 27 Political... 28 Affordability ... 29 Energy prices ... 29 Volatility ... 31 Analytical frameworks ... 33
Overall American energy security and in relation to Venezuela during the 1990s ... 33
Overall American energy security and in relation to Venezuela after the 1990s ... 34
2. CONCEPTUALIZING AMERICAN FOREIGN POLICY ... 37
Introduction ... 37
American overall foreign policy priorities ... 38
Democracy and Human Rights ... 38
Arms Control ... 39
Economic and Business Issues ... 39
War against drugs ... 40
Conflict and Stabilization ... 40
Counter-terrorism ... 40
Migration ... 41
Aid ... 41
Environment and Science ... 41
Diplomacy ... 42
Military Affairs ... 42
Global governance ... 43
Energy security ... 43
Communication and Information sharing ... 43
Geopolitics or geoeconomics ... 43
Analytical frameworks ... 46
Overall American foreign policy priorities during the 1990s ... 46
Overall American foreign policy priorities after the 1990s ... 47
Conclusion ... 48
3. CONCEPTUALIZING AMERICAN FOREIGN POLICY TOWARDS VENEZUELA ... 49
Introduction ... 49
Examination American foreign policy priorities towards Venezuela ... 49
Democracy and human rights ... 50
War against drugs ... 51
Economic and business issues ... 53
Military assistance ... 54
Counter-terrorism ... 55
Immigration ... 56
Energy security ... 56
Communication and information sharing ... 56
Arms Control ... 57
Venezuela’s Latin-American dominance ... 57
Aid ... 59
Analytical frameworks ... 59
American foreign policy priorities towards Venezuela during the 1990s ... 60
American foreign policy priorities towards Venezuela after the 1990s ... 61
Comparisons ... 61
Policy priorities ... 61
Conclusion ... 66
4. AMERICAN FOREIGN POLICY AND THE ABILITY TO IMPROVE ENERGY SECURITY ... 67
Introduction ... 67
Examination American foreign policy priorities on their ability to improve energy security ... 67
Democracy and Human rights ... 68
Arms control ... 69
Economic and business issues ... 70
War against drugs ... 72
Conflict and Stabilization ... 73
Counter-terrorism ... 74
Migration ... 75
Aid ... 76
Environment and Science ... 77
Diplomacy ... 79
Military Affairs ... 80
Global Governance ... 82
Communication and Information sharing ... 82
Venezuela’s Latin-American dominance ... 83
Energy Security ... 84
Analytical frameworks ... 85
Overall American foreign policy priorities during the 1990s ... 85
Overall American foreign policy priorities after the 1990s ... 86
American foreign policy priorities towards Venezuela during the 1990s ... 87
American foreign policy priorities towards Venezuela after the 1990s ... 88
Conclusion ... 89
CONCLUSION ... 93
Research question and hypothesis ... 93
Venezuela in US foreign policy ... 94
APERC’s approach ... 95
Mercille’s theory ... 96
1
Introduction
Energy is of crucial importance for the United States (US). Many sectors depend on power resources, such as the transport sector, and the American economy cannot survive without energy resources to power their industrial activities and operations.1 Also, for the well-being of the American citizens energy is essential to keep their many energy-consuming household activities running. Energy resources can be several, from wind- and solar power, but also electricity and transport fuels derived from fossil fuels such as oil and gas.
For the US it is of crucial importance to prevent a shortfall of energy resources supply. The large electricity breakdowns in the 1990s caused many inconveniences, for the economy as well as for the public well-being.2 Not only the energy production and distribution on American soil needs to be protected and maintained, the US is also dependent on imports, mainly of fossil fuels. A shortcut in these imports, for example the oil embargo in 1973, caused many problems for the American economy and daily life. Protection of the fossil fuel flows entering the US is just as important as safe-guarding the domestic distribution, as long as ‘energy independency’ has not been reached.3 This protection can take many forms, from protecting physical oil-fields, safe-guarding infrastructure (such as pipelines), avoiding embargos or securing choke points where tanker boats have to pass through. In addition to the protection of energy trade flows, it is important to maintain an affordable price for energy resources. Excessively high prices cause too many economic disadvantages for industries and households.
Because energy security is the focus point in this research, some definitions will be outlined. The situation in which energy imports are stable and affordable is referred to as energy security of supply. Or, as Daniel Yergin puts it: ‘the availability of sufficient supplies at
affordable prices’.4 This description is widely accepted in the literature and practically the same
1 Sovacool, Benjamin K. and Marylin A. Brown, ‘Competing dimensions of energy security: an international
perspective’, The annual review of environment and resources 35 (2010) 100 and Kalicki, Jan H. and David L. Goldwyn, Energy and security, toward a new foreign policy strategy (Washington 2005) 421.
2 Joskow, Paul L., ‘US energy policy during the 1990s’, John F. Kennedy school of government, Harvard University
(2001) 1-4.
3 Energy independency: This term was introduced by President Nixon. It means a situation wherein the US is
self-sufficient for its energy needs and does not need energy imports anymore. The American presidency project, Richard Nixon: ‘Address to the nation about national energy policy’ (1973), (consulted: 25 January 2012).
2
definition is provided by many authors.5 There are also other definitions of energy security, such as ‘the necessity for diversification and access to different energy suppliers and sources’.6 But in this definition some optimal circumstances are already embedded and it is not a pure definition of the situation of energy security itself. In my view energy security and the best circumstances to improve energy security are two different things.
The ‘situation of energy security’ knows many dimensions, variables and ideas about how this state should be reached and created. In this research the approach of the APERC will be applied. This will be elaborated further in this research.
That energy, and especially the security of energy supply, is important for the US is generally known. Daniel Yergin, Benjamin Sovacool and Andreas Goldthau argue that energy security is embedded in all aspects of American foreign policy.7 This opinion is not undisputed; Jan Kalicki and David Goldwyn argue that there has only been ‘episodic attention’ to the interconnection among energy and economic, foreign and security policies.8
This research will not provide an answer to this debate. It aims to shed a light on the ability of foreign policy to improve energy security. This will be done for both the overall American foreign policy, which consists of the mission and broad policy direction of the US Department of State, and the American foreign policy towards Venezuela, an important energy trade partner of the US.
Research question and sub-questions
Research question: To what extent had US foreign policy towards Venezuela the ability to
improve the US energy security situation compared to overall US foreign policy?
In order to formulate an answer to this question, four sub-questions have to be examined.
The first question is based on the idea that the extent to which American foreign policy towards Venezuela was able to improve energy security compared to the overall American
5 Goldthau, Andreas and Benjamin K. Sovacool, ‘The uniqueness of the energy security, justice, and governance
problem’, Energy policy (2011) 1.
6 Müller-Kraenner, Sascha, Energy security (London 2008) 20.
7 Goldthau, Andreas and Benjamin K. Sovacool, ‘The uniqueness of the energy security, justice, and governance
problem’, Energy policy (2011) 1 and Yergin, Daniel, ‘Ensuring energy security’, Foreign affairs 85 (2006) 69-71.
8 Kalicki, Jan H. and David L. Goldwyn, Energy and security, toward a new foreign policy strategy (Washington
3
foreign policy is likely to depend on the importance of Venezuela for American energy security. The first sub-question is as follows:
1. What was the importance of Venezuela for American energy security?
The Asia Pacific Energy Research Centre (APERC) provides four aspects of energy security which help explain this importance. These aspects are: availability, accessibility, affordability and acceptability.9 On the basis of these guidelines the US-Venezuelan situation with regard to energy will be assessed. This way the importance of Venezuela in American energy security can be framed. Examining the US-Venezuelan situation in combination with APERC’s four aspects will also generate ‘points for attention’, which need to be improved in order to create more energy security for the US. Based on these necessities for the level of US energy security some US policy expectations can be outlined.
After this chapter the broad policy lines of American foreign policy priorities will be examined on the basis of the theory of ‘radical geopolitics’ of Julien Mercille. He described a difference in the unfolding of foreign policy and the fundamental (hidden) causes.10 He argues that foreign policy consists of geopolitical and geoeconomic ‘unfoldings’ and that there is always a geoeconomic cause. Mercille classifies energy security as a geoeconomic issue. Therefore, geoeconomic policies are expected to have a larger ability to improve energy security. The executed policies will be classified as geopolitical or geoeconomic to see if both the overall US foreign policy and the US foreign policy towards Venezuela consisted of geopolitical as well as geoeconomic policy measures, because with only geoeconomic measures the ability to improve energy security would be too obvious. With this information the overall American foreign policy can be compared to the foreign policy towards Venezuela on their ability to improve energy security. This comparison is necessary in order to say something about a possible different US foreign policy approach towards an energy exporting country. To create more understanding about the influence of foreign policy on energy security it is not only necessary to look at energy security policies, but to the complete foreign policy, since there may be energy security improving externalities embedded in other foreign policy measures as well.
9 Asia Pacific Energy Research Centre, ‘A quest for energy security in the 21st century’, Institute of energy
economics (2007).
10 Mercille, Julien, ‘The radical geopolitics of US foreign policy: geopolitical and geoeconomic logics of power’,
4 2. What were the main American foreign policy priorities?
These policy priorities will be classified in geopolitical and geoeconomic measures. This will be done on the basis of the unfolding of these policies, which does not say anything about the fundamental cause.
To compare the overall American foreign policy with the policy towards Venezuela, the policy measures towards Venezuela will also be examined on the basis of Mercille’s theory:
3. What were the main priorities of American foreign policy towards Venezuela?
At last, the ability of these policies to improve energy security (on the basis of APERC’s aspects) will be assessed:
4. To what extent are the American foreign policies (overall and towards Venezuela) able to improve the level of energy security?
With the information from the sub-questions it is possible to come back to the research question. The comparison between the overall American foreign policy and the policy towards Venezuela shows if Venezuela received a different approach than could be expected from the overall policy lines and if this was compliant with the necessities for energy security. The concluding remarks will also explain which policies and policy strands have the ability to improve the level of energy security. The overall American foreign policy and the policy towards Venezuela can be compared on this ability.
The hypothesis is that the policies towards Venezuela have the ability to improve the level of energy security and that the overall American foreign policies have not (or less) such effect.
The choice for Venezuela
5
different influences of the general American foreign policy lines and the executed policies towards an energy producing country can be detected.
Venezuela has been selected to examine in this research. Venezuela is the fourth biggest oil exporter to the US, so the energy stakes for the US in this relationship are high.11 Given the political changes in Venezuela these last two decades and the effect of these changes on American foreign policy, it is possible to see if the influence of American foreign policy on energy security altered. This information contributes to examination of the influence of American foreign policy on the level of American energy security. Because of the political upheavals and undemocratic developments12 in the 1990s, these years seem to provide a good basis for this research. I will also touch upon policies conducted after the 1990s, because of the huge changes that occurred after Hugo Chávez came to power as Venezuelan president in 1999.13 This research will provide more clarity about the ability of overall American foreign policy to improve energy security and if Venezuela received a different US approach. The outcomes cannot simply be applied to other big energy trade partners of the US, because a detailed comparison between Venezuela and the other exporting country would be needed. Therefore, Venezuela is not an actual case study in this research, but an example to examine more thoroughly the ability of foreign policy to improve energy security.
Relevance of this research
The relevance of answering this research question is the possibility to observe a difference between overall American foreign policy and American foreign policy towards an energy exporting country –Venezuela- on the ability to improve American energy security. This difference can serve as guidance for better understanding the reasons behind American foreign policy and if these reasons might be energy related. The outcome can also imply that an improving American energy security situation due to US foreign policy is just a side-effect and that there is no difference in this ability between the overall American foreign policy and the American foreign policy towards Venezuela. Achieving better insight in the relationship between
11 Energy Information Administration, ‘Crude oil and total petroleum imports top 15 countries’, (consulted: 29
December 2011).
12
Kelly, Janet and Carlos A. Romero, The United States and Venezuela (New York 2002) 33-94.
13
6
energy security and the foreign policy of the US, as a powerful international player, helps to understand the impact of foreign policies on energy security and also helps to anticipate upcoming changes in the international energy market.14 This information can serve as a tool to examine if energy security depends on more than energy policies alone.
It is not the goal of this research to detect the fundamental causes of policy, nor to detect the actual energy security improvements. Examining the actual effects of policies on the real level of energy security would require a different method (energy security assessment theories). Mercille’s theory will be a guidance to see if foreign policy can have different consequences and externalities with regard to energy security than was intended/stated in the policy.
14
Nuttall, William J. and Devon L. Manz, ‘A new energy security paradigm for the twenty-first century’,
Technological forecasting & social change 75 (2008) 1247 and Yergin, Daniel, ‘Ensuring energy security’, Foreign
Theories
Julien Mercille’s ‘radical geopolitics of US foreign
policy’
John Dumbrell outlines many theories that influence US foreign policy making. He states that most of these theories can be traced back to the realist or liberalist traditions.15 Realism in foreign policy expresses itself as geopolitics and liberalism as geoeconomics.16 Dumbrell mentions that practically all theories on US foreign policy making acknowledge the importance of economic affairs and trade. In the realist tradition this emphasis on economy is seen as important in order to maintain economic power and the hegemonic status that is partly combined with economic prosperity. Also Michele Leiby and Christopher Butler point out that due to the increasing volume of trade and economic activity across borders, a foreign policy solely based on national security, geopolitics and military affairs is not accurate anymore. Foreign policy also needs to take up a facilitating role for economic transfers and interstate trade.17 Halil Çivi and Abdullah Özdemir agree with Leiby and Butler that geoeconomics takes a more and more prominent role in foreign policy over geopolitics. They see energy resources as the most important ingredient of geoeconomics and they argue that every action, including wars, can be ascribed to a desire to acquire energy resources and to secure energy supply.18
Julien Mercille combines radical political economy and critical geopolitics. He argues that the former does not put enough emphasis on geoeconomics, and that the latter focuses too much on the way political events unfold instead of on the fundamental causes of political events. By combining these theories he created his theory of ‘radical geopolitics’.19
15 Dumbrell, John, The making of US foreign policy (New York 1990) 7. 16 Ibid. 8.
17 Leiby, Michele L. and Christopher K. Butler, ‘The determinants of diplomatic dyads’, Peace science society
(2005) 21.
18 Özdemir, Abdullah and Halil Civi, ‘Global energy policies in the geoeconomic process’, Adnan Menderes
university (2008) 1.
19 Mercille, Julien, ‘The radical geopolitics of US foreign policy: geopolitical and geoeconomic logics of power’,
8
Julien Mercille developed his theory of ‘radical geopolitics’ based on the assumption that there are two ‘logics of power’ in the making of foreign policy; the ‘geopolitical logic’ and the ‘geoeconomic logic’.20
Mercille defines the approach of geoeconomics as ‘the flows of trade, finance and capital
over global space and across borders, taking into consideration the political aspects behind such movements’.21 He defines the approach of geopolitics as ‘the political, diplomatic and military strategies invoked and used by a state’.22
Mercille states that geoeconomic factors are the most important in the making of foreign policy and that geopolitical factors can be important in the way in which the execution and unfolding of this policy takes place.23 He also underlines the overlap between geoeconomics and geopolitics by arguing that geopolitical measures are mostly geoeconomic in essence, because the economic position of the US influences its political hegemonic power.24
This last point is described by Mercille as the difference between the ‘why’ (the causes) of policy, and the ‘how’ (the way they unfold).25 He argues that there is not enough attention to the ‘why’ of policy.26 Mercille argues that the debate about what drives policy should refer to the causes of policy, not to the policies themselves.27
Mercille provides a few examples where geopolitical measures were geoeconomic in essence. The war in Vietnam is a political measure (the ‘how’), but geoeconomic in essence (the ‘why’) according to Mercille. Vietnam and South-East Asia were perceived as significant for the economic recovery of American allies during the Cold War, such as Japan, France and Britain. It was important to the US that South-East Asia would be aligned with the capitalist world and contribute to its economic needs. Political instability in South-East Asia was a serious obstacle to these economic needs and military intervention was needed to preserve the region for the ‘free world’.
20 Mercille, Julien, ‘The radical geopolitics of US foreign policy: geopolitical and geoeconomic logics of power’,
9
Mercille’s theory has been selected for this research, because of his clear distinction between the ‘why’ and the ‘how’ of foreign policy. On the basis of this distinction it is possible to detect the possible reasons behind American foreign policy and if these reasons might be energy related, without this being intended/stated in the policy. For this purpose the ability of foreign policy to improve energy security will be examined. Julien Mercille shortly touches upon the issue of energy security, which he describes as a geoeconomic issue. On the basis of his theory, the policies can be classified in geopolitical and geoeconomic measures, to make sure that the policies do not only consist of geoeconomic measures, which are more likely to improve energy security.
Julien Mercille sees a clear boundary between geopolitics and geoeconomics, as does Andreas Löschel.28 On the other hand, theorists like Janet Kelly and Carlos Romero argue that geopolitics and geoeconomics get more and more blurred.29 Özgür Özdamar argues that there is a substantial vacuum in the energy security literature about the give-and-take between politics and other disciplines, such as economics.30 This research will show that the overlap and intertwining of geopolitics and geoeconomics is very high and shed a light on the usefulness of making a clear distinction between both strands.
APERC’s four aspects of energy security
The introduction showed that there are several relevant aspects of energy security. Most aspects, factors or dimensions of energy security that are described in the literature are meant to examine the level of security of energy supply of a certain energy importing country. Some of them also lead to policy recommendations to increase this level of energy security. In my research these aspects of energy security will be used to assess the importance of an energy exporting country within the energy security of an energy importing country, and to examine which policy measures are able to improve energy security. The reasons to use these aspects for this purpose
28 Mercille, Julien, ‘The radical geopolitics of US foreign policy: geopolitical and geoeconomic logics of power’,
Political geography 27 (2008) and Löschel Andreas et al., ‘Indicators of energy security in industrialized countries’,
Energy policy 38 (2010) 1666.
29 Kelly, Janet and Carlos A. Romero, The US and Venezuela (New York 2002) 111.
30 Özdamar, Özgur, ‘Energy, security, and foreign policy’, Ankara university of economics and technology (2009)
10
are twofold; first of all there is no literature that describes factors to assess the importance of a certain energy exporting country in improving the energy security of a certain energy importing country. Second, APERC’s aspects are not only composed to measure the level of energy security of energy importing countries, but also to form a basis for policies.31 If most energy security policies and the level of energy security are based on these aspects, it can be assumed that also the importance of one energy exporting country can be assessed by examining these aspects.
APERC defines energy security as: ‘the ability of an economy to guarantee the availability of
energy resource supply in a sustainable and timely manner with the energy price being at a level that will not adversely affect the economic performance of the economy’.32 APERC describes four main aspects of energy security through which they aim to provide tools for countries to improve their level of energy security.
The first aspect is availability. APERC describes availability as the physical available reserves, such as oil, gas and coal. APERC includes production, proven reserves and estimated discoveries.33 Benjamin Sovacool and Marilyn Brown describe this aspect as ‘procuring a
sufficient and uninterrupted supply and minimizing foreign dependency on fuels’.34 APERC also
takes these factors into account, but they classify these as the accessibility of available resources. I think the distinction made by APERC between availability and accessibility is clearer. Something can be available, but not accessible. In the theory of Sovacool and Brown this distinction is blurred.
The second aspect is accessibility. This concerns the access to the available resources. Accessibility can be promoted or hindered by several factors. There can be economic barriers, such as a lack of investments, unstable prices or low energy prices, which reduce profits and therefore the production possibilities of available resources. There can also be political barriers; gaining access to resources in politically unstable regions can be difficult and the lack of cooperation between national oil companies and international oil companies can constrain exploitation even further. National oil companies hold more than 80% of the world’s oil reserves,
31 Asia Pacific Energy Research Centre, ‘A quest for energy security in the 21st century’. 32 Ibid. 5-6.
33 Ibidem.
34 Sovacool, Benjamin K. and Marylin A. Brown, ‘Competing dimensions of energy security: an international
11
but they need the technical expertise and capital investments of international oil companies to produce these reserves. Without cooperation production will be more costly and less efficient. There can also be geographical factors that restrain accessibility, such as reserves in deep seas or arctic areas, which are very difficult to reach and produce. Furthermore, there can be technological constraints which are highly correlated to the geographical constraints. In the future, energy demand has to be met by non-conventional resources, such as shale gas and oil sands, which are more expensive to develop and produce. As profits can only be achieved with technological advances, investments are essential. Another barrier to accessibility can be a lack of qualified workforce, nowadays there is a shortage of trained and technical staff in the energy sector.35
APERC’s description of accessibility includes several barriers or promoting elements to accessibility, without focusing too detailed on one aspect. For example, Ishani Mukherjee and Benjamin Sovacool also mention an aspect of accessibility, but they narrow this down to technology, while this aspect can be so much broader.36 Britt Childs Staley focuses on diversity, infrastructure and technology as separate focus points.37 These points can all be included in APERC’s description of accessibility.
The third aspect is acceptability. Acceptability can be political and environmental according to APERC. This concerns the awareness of policymakers and public opinion of environmental problems and political situations in supplier countries.
John Mitchell argues that acceptability influences the perception of availability. Acceptability issues, such as social values and the environment, are often subject of debate. Some available resources may be indicated as harmful to the environment or societies and are therefore no real option for exploitation according to public opinion. Public acceptability has to be taken into account by making a costs-benefit analysis for resource production.38 Also Jan
35 Asia Pacific Energy Research Centre, ‘A quest for energy security in the 21st century’.
36 Sovacool, Benjamin K. and Ishani Mukherjee, ‘Conceptualizing and measuring energy security: a synthesized
approach’, Energy 36 (2011) 5343-5355.
37 Childs Staley, Britt, et al., ‘Evaluating the energy security implications of a carbon-constrained U.S. economy’,
Center for strategic and international studies (2009).
38 Mitchell, John V., ‘A new political economy of oil’, The quarterly review of economics and finance 42 (2002)
12
Kalicki and David Goldwyn point out that the real risk to supplies in the future will be geopolitics (including public opinion), and not geology.39
Sovacool, Brown and Mukherjee also mention the acceptability aspect, but they only focus on environmental stewardship and sustainability.40 The political aspect of acceptability cannot be ignored and therefore I prefer APERC’s description of acceptability.
The fourth aspect is affordability. APERC describes affordability as the prices of energy resources and the volatility of these prices. High energy prices can lead to an economic slowdown in energy importing countries, low energy prices can cause diminishing investments in the energy sector.41 Volatile energy prices can hinder upstream investment and cause uncertainty about future supply. Volatile prices may also negatively affect the level of energy security, the stability of energy commodity markets and investors’ confidence.42 Energy prices and their volatility should not be confused. Affordability in terms of energy prices focuses on the relative price of energy and its influence on the economy, while affordability in terms of volatility focuses on the stability of energy prices.43 Fluctuations of the prices can be caused be several factors, such as political upheavals, which may result in potential supply disruptions. Another factor can be imbalances between demand and supply, which can result in changing energy prices and can impede the precise forecast of long-term demand and supply. Diminishing investments can also be a cause of price fluctuations, because this can lead to uncertainty about future energy supply.44
Most descriptions of affordability focus on investments and markets. APERC includes these factors under the economic accessibility of resources and defines affordability as the actual prices and volatility of resources.45 In my opinion this is a better classification, because this way
39 Kalicki, Jan H. and David L. Goldwyn, Energy and security, toward a new foreign policy strategy (Washington
2005) 51-413.
40 Sovacool, Benjamin K. and Marylin A. Brown, ‘Competing dimensions of energy security: an international
perspective’, The annual review of environment and resources 35 (2010) 77-108 and Sovacool, Benjamin K. and Ishani Mukherjee, ‘Conceptualizing and measuring energy security: a synthesized approach’, Energy 36 (2011) 5343-5355.
41 Georgiou, George C., ‘US energy security and policy options for the 1990s’, Center for economic education
(1993) 836.
42 Joint Organisations Data Initiative, (consulted: 25 March 2012).
43 Sovacool and Brown, ‘Competing dimensions of energy security 82-84 and Löschel Andreas et al., ‘Indicators of
energy security in industrialized countries’, Energy policy 38 (2010) 1665-1671.
44 Asia Pacific Energy Research Centre, ‘A quest for energy security in the 21st century’.
45 Childs Staley, Britt, et al., ‘Evaluating the energy security implications of a carbon-constrained U.S. economy’,
Center for strategic and international studies (2009) and Yergin, Daniel, The quest; energy, security, and the
13
affordability can focus on the effect of prices and volatility on the economy. Economic accessibility can focus on the other side, investments to access resources.
The difference between affordability and economic accessibility lies in the distinction between prices and volatility as such, and their causes and influences. The affordability aspect deals with the price levels and volatility; energy needs to be affordable, which means that prices need to be as low as possible in order to keep the economy running. High prices entail a lot of extra costs, such as higher costs in the transportation sector and increased costs for many industrial operations. Low prices with a low volatility rate are ideal according to the affordability aspect. Economic accessibility focuses on the broader effects of energy prices and volatility. It is taken into account that high prices can have advantages, because they may trigger investments and new production possibilities.46 Economic accessibility also focuses on the underlying causes of price fluctuations, such as geopolitical issues, imbalances between demand and supply or decreasing investments.47
Some factors mentioned in the literature cannot (or not as easy) be included in APERC’s classification. These include (1) energy efficiency to decrease demand and imports, (2) regulation, national policies and international institutions and (3) the security of trade flows.48
In my opinion the first aspect is less relevant for this research. Efficiency and other measures to decline the domestic energy use will affect all energy trade partners of the US and not only Venezuela.
The second aspect will be taken into account, even though it is not a separate aspect. Some parts will be included in the political accessibility aspect. Other parts will be described when the situation in the US and Venezuela and their relationship is outlined. In addition, because this research examines US policy, it would also be a bit confusing if this policy was an aspect of the examination in the first place. The security of trade flows will be included in the accessibility of resources.
46 Asia Pacific Energy Research Centre, ‘A quest for energy security in the 21st century’. 47 Ibidem.
48 Sovacool, Benjamin K. and Marylin A. Brown, ‘Competing dimensions of energy security: an international
perspective’, The annual review of environment and resources 35 (2010) 77-108, Sovacool, Benjamin K. and Ishani Mukherjee, ‘Conceptualizing and measuring energy security: a synthesized approach’, Energy 36 (2011) 5343-5355, Childs Staley, Britt, et al., ‘Evaluating the energy security implications of a carbon-constrained U.S. economy’,
Center for strategic and international studies (2009) and Yergin, Daniel, The quest; energy, security, and the
14
After examination of these theories and definitions, APERC’s four aspects of energy security have been selected as focal points. Another reason to select APERC’s aspects is their clarity, broad acceptance in the literature and wide use in energy security measurements.49
Now it is possible to have a look at the American energy security situation. Special focus will be placed on the different priorities of policy issues. These priorities in American foreign policy will be compared with the necessity of certain measures that came to the surface in chapter one. This way it is possible to detect a difference between the overall American foreign policy and the specific foreign policy towards Venezuela in their compliance to these necessities for energy security. This information can provide more clarity about the unique American approach of Venezuela.
The executed policies will be classified in geopolitical and geoeconomic measures. On the basis of this classification I will be able to see if energy security improvements can also occur due to geopolitical measures, and if this is only the case in American foreign policy
towards Venezuela or also in overall foreign policy. This is interesting because energy security is seen as a geoeconomic issue by Mercille and therefore it can be expected that geoeconomic measures are more related to energy security than geopolitical measures. Taking into account the possible ability of geopolitical foreign policies to improve energy security can provide more knowledge about the influence of foreign policy on energy security. Subsequently, I will examine which policies have an ability to improve energy security. This will be done on the basis of APERC’s aspects of energy security.
49 Karlsson, David, ‘Is energy in Sweden secure?’ Uppsala Universitet (2010) and Kruyt, Bert et al., ‘Indicators for
1.
Venezuela and American energy security
Introduction
To answer the research question it is necessary to make clear what American energy security entailed, which role Venezuela played within this energy security and which measures were necessary to improve American energy security. Details about the importance of Venezuela in American energy security are necessary to examine whether the US had reasons to adapt their foreign policy towards Venezuela according to their energy security needs. In this chapter the role of Venezuela in American energy security in the 1990s and thereafter will be investigated on the basis of APERC’s four aspects of energy security.
American energy security
This paragraph will serve as a short introduction to American energy security and energy policies in the 1990s and 2000s. Energy security has been a vital matter in American policy for a long time. Last century, it appeared on the agenda for the first time when the American Navy switched from coal to oil as their main fuel, which had to be imported. From then on, energy security was a serious matter in the US. Not only the Navy and the military relied on energy, but the whole economy and civilization depended on energy.50 Ever since Richard Nixon’s famous ‘Project Independence’ speech during the 1973 oil crisis, a lot of Americans were convinced by the idea that the US should become energy independent.51
US energy security in the 1990s was characterized by an ‘energy crisis’ stimulated by the first Gulf War, major increases in oil and gas prices, the failure of California’s competitive electricity markets and the threat of electricity shortages throughout the Western US. The government was forced to develop national energy strategies and to try to convince Congress to approve wide-ranging energy legislation. In the 1990s there were also growing US national security concerns related to energy; a growing part of US energy consumption was supplied by
50 Bohi, Douglas R. and Michael A. Toman, The economics of energy security (Norwell 1996) 2.
51 The American presidency project, Richard Nixon: ‘Address to the nation about national energy policy’ (1973),
16
imports, mostly from North Africa, the Arabian Gulf, Russia, and countries that were formerly part of the Soviet Union. These regions were politically unstable and had governments that were not always friendly to the US.52
After the 1990s the energy prices rose to the highest level since the early 1980s and a serious energy shortage was feared.53 President Bush implemented tax cuts and production incentives for almost all forms of energy, including renewables and energy efficiency measures.54 There was not much attention to environmental problems. In fact, energy companies were exempted from some environmental laws.55 Energy imports had to be reduced by more efficiency in the transportation sector.56
Now that a brief overview of the American energy security situation has been given, the four aspects of APERC will be applied.
APERC’s four aspects of energy security
Availability
The 1990s were characterized by stable or falling energy prices, plentiful supplies of energy and relatively little public or political interest in energy issues. Energy consumption continued to grow gradually through the 1990s, but supply was able to meet demand without significant price increases until the end of the decade.57 Worries about the depletion of natural energy resources were not a significant issue before 2000. After 2000, theories about depletion were taken more
52 Joskow, ‘US energy policy during the 1990s’ and Deutch, John, ‘Future United States energy security concerns’,
Massachusetts Institute of Technology (2004) 1-6, Federal Research Division of the Library of Congress, ‘Country Studies /Area Handbook Series’, (consulted: 17 March 2012).
53 National Energy Policy Development Group, ‘Reliable, affordable, and environmentally sound energy for
America’s future’, (2001) viii.
54 Grunwald, Michael and Juliet Eilperin, ‘Energy bill raises fears about pollution’, Washington Post (30 July 2005). 55 Jordan, Katrin, ‘Changes and continuities in US energy policy’, German institute for international and security
affairs (2005) 11.
56 Ibid. 12.
57 Jordan, Katrin, ‘Changes and continuities in US energy policy’, German institute for international and security
affairs (2005) and Joskow, Paul L., ‘US energy policy during the 1990s’, John F. Kennedy school of government,
17
seriously and the rising energy demand of China and India made the Western countries worry about a struggle for resources.58
Venezuela was the world’s fifth-largest petroleum producer in 1990 and the world’s third-largest petroleum exporter.59 Venezuela possesses seven percent of the world’s oil reserves, which are the largest reserves in the Western hemisphere.60 During the 1990s and 2000s the proven oil reserves of Venezuela increased even further.61 So Venezuela played an important role in the availability of resources.
Accessibility
As explained above, a full account of the accessibility of energy consists of an analysis of the economic, political, geographical, technological and workforce aspect of energy accessibility.
The geographical and technological aspects as described by APERC will be analyzed simultaneously here, because there is no need to make a distinction between them. Of course there are differences between geography and technology, but for my research they are irrelevant. Most technological constraints a country faces with regard to energy exploitation have to do with the geographical situation, so they are highly correlated. Other technological aspects, such as the development of energy efficiency technologies, do not have much to do with the relations between two countries.
Economic
Energy supports economic growth and development, therefore energy market instability and insecurity is very disadvantageous to the US economy.62
58 Joskow, Paul L., ‘US energy policy during the 1990s’, John F. Kennedy school of government, Harvard
University (2001) 1-6 and Simmons, Matthew R., ‘Depletion and US energy policy’, Simmons & Company
international (2002) 1-11.
59 Haggerty, Richard A., Venezuela: A Country Study (Washington 1990), (consulted: 6 March 2012). 60 Kahn, Jeremy, ‘Caracas dispatch, crude analysis’, The new republic 14 (2003) and US Energy Information
Administration, (consulted: 13 March 2012).
61 US Energy Information Administration, (consulted: 1 March 2012).
62 Sovacool, Benjamin K. and Marylin A. Brown, ‘Competing dimensions of energy security: an international
18 63
This graph shows the oil prices in the 1980s, 1990s and 2000s. We can see that the prices rose sharply from 1998 onwards. This was caused by a highly raised demand triggered by the upcoming of China, India and Brazil and because of increased awareness of the possible depletion of natural resources.64
Volatility shows the fluctuation and stability of prices. It displays the relative pace at which prices move up and down. If a price fluctuates rapidly over a short period of time, this means there is high volatility. If the price almost never changes, there is low volatility.65
63 US Energy Information Administration, Petroleum and other liquids (consulted: 13 April 2012). 64 History of Illinois basin posted crude oil prices, (consulted 2 March 2012).
65 Investor words: volatility, (consulted: 1 March 2012).
0 5 10 15 20 25 30 35 40 45 1 9 8 6 1 9 8 7 1 9 8 8 1 9 8 9 1 9 9 0 1 9 9 1 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4
World crude oil price
19 66
Not only the oil prices itself, but also the volatility rose sharply from 2000. Because of events like 9/11, the wars in Afghanistan and Iraq and hurricane Katrina and insecurity about energy demand in rapid developing countries, insecurity about market disruptions rose.67 In the 1990s there was not much volatility and therefore volatility was not a big issue in American energy security policy. After the 1990s market stability became an important US policy goal.68
The Venezuelan economy was quite stable in the 1990s and the country was attractive for foreign investments and the big American oil companies had a large influence on the Venezuelan oil market and Venezuelan oil companies.69 There was more control over the Venezuelan economy by treaties than there was over economies in the Middle-East. Venezuela is relatively
66 US Energy Information Administration. (consulted: 1 March 2012).
67 Asia Pacific Energy Research Centre, ‘A quest for energy security in the 21st century’.
68 Jordan, Katrin, ‘Changes and continuities in US energy policy’, German institute for international and security
affairs (2005) 12-14.
69 Kelly and Romero, The United States and Venezuela (New York 2002) 2-124 and Kozloff, Nikolas, Hugo Chávez,
20
closely situated to the US, which reduced the transportation costs. The US imported 11% of their oil from Venezuela, this was 40% of Venezuela’s oil exports.70
American investments in Venezuela increased during the 1990s. The Venezuelan president Caldera, who was president from 1994 until 1999, approved new regulations to allow foreign companies to operate gasoline stations. Also president Chávez recognized the importance of foreign investments and made sure that his new constitution, which was approved at the end of 1999, was well received by foreign investors.71
In 1998 the negotiations started for the Free Trade Area of the Americas, in which the US and Venezuela would participate.72 These negotiations triggered optimism about trade between both countries and generated good relations. Hugo Chávez changed the optimism about the Free Trade Area. After 2001 he became more skeptical about this idea and he wanted to strengthen Latin American regional trade blocs. He was also worried about the distribution of the benefits among the participants and about the acceleration of the process to implement the Free Trade Area in 2003 instead of 2005.73 After two coup attempts on the Chávez government in 2002, Chávez became even more hostile to the Free Trade Area initiative. Chávez charged it did not solve any social problems. He called the initiative a ‘path to hell’.74
Political
The political aspects of accessibility focus mainly on trade relations, political stability in supplier countries and the role of national oil companies.75 There was a strong desire in the US to decrease the imports from the relatively unstable Middle-East and to escape from the OPEC-cartel.76 Foreign policy initiatives in the 1990s and 2000s endeavored to strengthen trade relationships with the governments of oil producing states, to diversify the nation’s oil imports, and to foster the independence of oil producing states.
70 Fulgham, Quintin, ‘Venezuela’s potential threat to the United States’ national security: an analysis of the
conflictual inter-country relationship’, U.S. Army war college (2006) and Ghosh, Palash R., ‘Venezuela: awash in oil, but riddled with corruption, inefficiency’, International business times (2012), (consulted: 1 August 2012).
71 Kelly, Janet and Carlos A. Romero, The United States and Venezuela (New York 2002) 48-124. 72 Ibid. 116.
73 Kozloff, Nikolas, Hugo Chávez, oil, politics and the challenge to the U.S. (New York 2006) 65-66. 74 Ibid. 72.
75 Asia Pacific Energy Research Centre, ‘A quest for energy security in the 21st century’.
76 Joskow, ‘US energy policy during the 1990s’ and Deutch, John, ‘Future United States energy security concerns’,
21
Diversification of suppliers is seen as a measure to strengthen energy security, because a supply disruption from one country can then be counterbalanced by imports from other supplier countries.77
The independence of oil producing states, such as the newly independent former Soviet-states, was an important issue for the US. By guarding these countries’ autonomy, the US aimed to reduce the influence of unfriendly regimes, such as those in Iran and Russia, on these newly independent countries. By guarding their independence the US also intended to keep these countries away from the price setting mechanisms of the OPEC.78
Oil production by international oil companies was also an important issue in US energy security. International companies can invest capital and they possess the right technologies to exploit resources. During the 1990s most of the large oil producing states had a national oil company, owned by the state. This was the case in Saudi Arabia, Nigeria, Mexico, Iraq and Kuwait.79 A state-owned oil company meant state control over the natural resources, which was a disadvantage for the energy importing countries, such as the US.80 National oil companies often try to gain a market share in an aggressive way. Their financial and political assets are used to strengthen their countries’ foreign influence. This entails several risks for energy consuming states and energy markets. Most national oil companies are very bureaucratic, inefficient and often also corrupt.81 Because of national oil companies’ high share of the world’s resources and their mismanagement, the prices of energy may rise. Another risk for energy importing countries is the high revenues national oil companies make, which flow towards the government. This can encourage states to execute a risky foreign policy and to threaten their friendly relationships with other states, because they are less reliant on foreign support. They can also decide to spend money on the development of a nuclear program. In addition, states with a stable, abundant inflow of resource revenues can better afford themselves to ignore demands from the international community. Oil wealth can increase the immunity of aggressive countries to
77 Kalicki, Jan H. and David L. Goldwyn, Energy and security, toward a new foreign policy strategy (Washington
2005), 55 and Yergin, Daniel, ‘Ensuring energy security’, Foreign affairs 85 no. 2 (2006) 69-82.
78
Joskow, Paul L., ‘US energy policy during the 1990s’, John F. Kennedy school of government, Harvard
University (2001) 1-6 and Deutch, John, ‘Future United States energy security concerns’, Massachusetts Institute of
Technology (2004).
79 US Energy Information Administration, ‘Who are the major players supplying the world oil market?’ (consulted:
1 March 2012).
22
peacekeeping initiatives, such as mediation and negotiation. This can prolong conflicts or encourage countries to participate in a conflict.82 When states have power over their resources through a national oil company some importing states are afraid they might use the ‘oil weapon’.83 This ‘weapon’ can be used by oil-producing countries against consumer counties by shutting down the oil-supply.84 The best example is the oil-boycott in 1973.85 This supply disruption altered the relations between energy importing and exporting countries and was one of the reasons that security of energy supply became a big issue on the political agenda in oil-importing countries.86 Nowadays the question rises if the threat with the ‘oil weapon’ is still significant and if the threat can only be made by producing countries, or if this phenomenon can also be turned around. In this case the oil-importing countries can threaten the oil-producing countries to shut down the imports (like the situation between the European Union and Iran at the moment of writing).87 Opinions about the significance of the ‘oil weapon’ for oil-importing countries are divergent. Some argue that these kinds of threats always need to be taken very seriously in order to protect energy security.88 Others claim that the mutual dependence of oil trading countries is too significant to shut down exports, they see such threats more as a new form of ‘Cold War’: a lot of threats and rhetoric, but both sides know that it is almost impossible to seriously execute the threats.89 Brenda Shaffer, Jan Kalicki and David Goldwyn do not believe in this ‘oil weapon’, they argue that exporting countries are too dependent on continuous exports and that they will hurt their own economies too much if they would stop exporting to a large consumer as the US.90
To examine US foreign policy towards Venezuela at the political accessibility aspect, the aspect has been divided in four subcategories: regime stability, diversification, state-owned oil companies and the ‘oil weapon’.
82 Billon, P. le and A. Cervantes, ‘Oil prices, scarcity and geographies of war’, Annals of the Association of
American Geographers 99 no. 5 (2009) 838-839.
83 Bremmer, ‘The Return of State Capitalism’, 55-58.
84 Kozloff, Nikolas, Hugo Chávez, oil, politics and the challenge to the U.S. (New York 2006) 7-11. 85 Yergin, Daniel, ‘Ensuring energy security’, Foreign affairs 85 no. 2 (2006) 69-82.
86 Ibidem.
87 NOS, ‘EU stelt olieboycot in tegen Iran’, NOS Nieuws (23 January 2012), (consulted 25 February 2012). 88 Kozloff, Nikolas, Hugo Chávez, oil, politics and the challenge to the U.S. (New York 2006) 7-11.
89 Shaffer, B., Energy Politics (Philadelphia 2009) and Kelly and Romero, The United States and Venezuela 65-115. 90 Shaffer, B., Energy Politics (Philadelphia 2009) and Kalicki, Jan H. and David L. Goldwyn, Energy and security,
23
Regime stability
The 1990s marked a period of political instability and domestic reform in Venezuela, including two coup-attempts in 1992, which ultimately resulted in the election of Hugo Chávez in 1998.91 The US-Venezuelan relations suffered under these upheavals and certain trade conflicts appeared. The US were much more interested in internal events in Venezuela than they were in the 1980s, because in the 1990s these events had more and more influence on Venezuela’s surroundings and the Western hemisphere as a whole.92 These developments and the increased American attention to internal Venezuelan events caused frictions between both countries. Despite these issues the two countries maintained their overall friendship. In the 1990s the strategic interests of both countries to maintain friendly relations were strong. They both wanted to preserve the hemispheric security and their mutual dependence in oil trade was another reason to continue the friendship. Despite increasing political instability in Venezuela, the US stayed close and attempted to protect the Venezuelan stability as much as possible.93 The increasing political instability did not have a big impact on the oil industry and trade before the presidency of Hugo Chávez, because the industry was not completely controlled by the state.94 It can be said that although the political situation and stability in Venezuela was deteriorating, the situation was not specifically worse than in many Middle-Eastern countries, so this was no reason to reduce trade with Venezuela.95 In the 2000s, the friction between the US and Chávez intensified, which negatively affected the energy trade between the countries.96
Diversification
Another factor of political accessibility is the diversification of trade partners. The US wanted to decrease the risk of supply disruptions by diversification of their trading partners.97 They also took into account the influence and actions of the OPEC and the commitment of supplier
91 Kelly, Janet and Carlos A. Romero, The United States and Venezuela (New York 2002) 33-94. 92 Ibidem.
93 Ibid. 35-143. 94 Ibid. 7-11.
95 Federal Research Division of the Library of Congress, ‘Country Studies /Area Handbook Series’, (consulted: 17
March 2012).
96 Kelly, Janet and Carlos A. Romero, The United States and Venezuela (New York 2002) 33-94.
97 Kalicki, Jan H. and David L. Goldwyn, Energy and security, toward a new foreign policy strategy (Washington
24
countries to the OPEC.98 Before the Chávez presidency, Venezuela was not very committed to the OPEC and the incompliance with the OPEC quotas was a good thing in the eyes of the US, who assumed these quotas would raise oil prices.99 Chávez sought more rapprochements with the OPEC, to the annoyance of the US.100
In the 1980s the US imported 3% of their oil from Venezuela and 33% from the Middle-East, in the 1990s this was 11% from Venezuela and 31% from the Middle-Middle-East, so the amount of oil imported from Venezuela had risen.101 In the 2000s these numbers were practically unchanged. After 2010 the US crude oil imports from Venezuela declined.102
Countries in the Middle-East were not very reliable to importing countries and the transportation costs for Middle-Eastern oil were higher.103 With a looming war in the Middle-East in the 1990s (Gulf War) Venezuela’s oil was essential to the US.104
State-owned Oil Companies
Another aspect of political accessibility is the cooperation between national oil companies and international oil companies. In the 1990s the oil market in Venezuela opened. Foreign investors and companies could easily cooperate with the Venezuelan oil company Petróleos de Venezuela S.A. (PDVSA). PDVSA’s director Luis Giusti foremost wanted to make PDVSA a profitable company. In his view the OPEC quotas were outdated and he focused on volumes instead of prices.105 Venezuela was quite unique in this view; most of the OPEC countries had a state-owned national oil company, where foreign investment was difficult.106 So in the 1990s the investment climate in the Venezuelan oil industry was in favor of foreign companies and the Venezuelan view of the OPEC was convenient for the US. These were incentives for the US to
98 Deutch, John, ‘Future US energy security concerns’, Massachusetts Institute of Technology (2004) 1-12. 99 Kozloff, Nikolas, Hugo Chávez, oil, politics and the challenge to the U.S. (New York 2006) 7-11 and Hellinger,
Daniel, ‘Venezuelan oil: free gift of nature or wealth of a nation?’, International Journal 62 (2006) 55-67.
100 Kelly, Janet and Carlos A. Romero, The United States and Venezuela (New York 2002) 45. 101 US Energy Information Administration, ‘US imports of crude oil’, (consulted: 1 March 2012).
102 US Energy Information Administration, ‘Country analysis briefs, Venezuela, oil’, (consulted 4 September 2012). 103 Fulgham, Quintin, ‘Venezuela’s potential threat to the United States’ national security: an analysis of the
conflictual inter-country relationship’, U.S. Army war college (2006).
104 Kahn, ‘Caracas dispatch, crude analysis’, Kozloff, Hugo Chávez, 7-11 and Ferrell, O.C., ‘Free trade: The United
States and Venezuela’, Daniels Fund Business Ethics Initiative (2010).
105 Kozloff, Nikolas, Hugo Chávez, oil, politics and the challenge to the U.S. (New York 2006) 7-11.
106 Kozloff, Nikolas, Hugo Chávez, oil, politics and the challenge to the U.S. (New York 2006) 7-11 and Hellinger,
25
do business with Venezuela. After coming to power, Hugo Chávez started with a new constitution and nationalization of the Venezuelan oil industry, which deteriorated the circumstances for foreign investors.107
The ‘oil weapon’
Another part of the political accessibility of resources is the threat with the ‘oil weapon’. This factor is a political aspect of accessibility, because the ‘oil weapon’ is mostly used as a threat based on political disagreements. Although the ‘weapon’ itself is economic, the threat, its causes and the measures to prevent its execution are political. The likelihood of the ‘oil weapon’ is disputed. In the specific case of the US-Venezuelan relations this is also the situation. Brenda Shaffer, Janet Kelly and Carlos Romero outline the economic dependence of Venezuela on trade with the US and the harm an export-stop would do to the Venezuelan economy. They explain that it is unlikely that Venezuela would exercise a threat to stop oil supply, because the Venezuelan people would suffer more than the Americans, and will never accept such a decision from their government.108
On the other hand, Nikolas Kozloff describes that Hugo Chávez declared oil to be a political weapon and that he can use this whenever he may feel necessary. So according to Kozloff the threat of an export-stop from Venezuela is still significant and he argues that the US should maintain good relations with Venezuela to avoid the execution of such a threat.109
What speaks in favor of Venezuela in the eyes of the US is that they refrained from joining the OPEC in the oil-boycott in 1973.110 Before the Chávez presidency, Venezuela was not very committed to the OPEC. This weakened the American fear of the Venezuelan ‘oil weapon’ and possible boycotts initiated by the OPEC in the 1990s. Chávez was more OPEC-minded, but the dependence of Venezuela on US oil imports is still significantly higher than the
107 Georgetown University, Political database of the Americas (11 April 2012).
108Shaffer, Energy Politics and Kelly, Janet and Carlos A. Romero, The US and Venezuela (New York 2002)
65-115.
26
dependence of many Middle-Eastern countries on US oil purchases.111 The US faced the consequences of an oil-boycott in 1973 and they might be eager to avoid a repeat by all means.
Geographical / technological
Geography and technology were not a big issue in US energy security in relation to energy security in the 1990s. Since 2000 these issues really came in the picture. This was because of the increased awareness of possible depletion of natural resources and the subsequent search for new sources of energy and renewables.
Nowadays there exists a huge technological challenge in Venezuela to exploit the Orinoco tar sands.112 In the 1990s these resources were not yet discovered and the focus was on the conventional reserves. In the 1990s, there were no significantly more (or less) geographical or technological challenges in Venezuela than in any other resources producing country, and therefore no incentive for companies to stay away from Venezuela because of geographical or technological reasons.113 After the 1990s unconventional resources around the world became more and more important due to the declining conventional reserves and rising prices.114 In this respect Venezuela was no exception either.115
Workforce
The problem of a lack of a skilled, qualified workforce was not an issue in the 1990s. There was no shortage of workers in the US nor were there warning signs that there would be a shortage in
111 Federal Research Division of the Library of Congress, ‘Country Studies /Area Handbook Series’, (consulted: 17
March 2012).
112 Tar sands are loose sand or partially consolidated sandstone containing an extremely viscous form of petroleum.
Tar sands reserves have only recently been considered to be part of the world's oil reserves, as higher oil prices and new technology enable them to be profitably extracted and upgraded to usable products.
113 Coyle, William, ‘The future of biofuels, a global perspective’, Amber Waves, economic research service 5 no. 5
(2007).
27
the near future.116 In the 2000s the shortage of talented employees in the energy sector became more and more a problem.117
In the 1990s a lot of skilled workers in the Venezuelan oil industry came from abroad. Only for the lower-skilled jobs local Venezuelan workers were hired.118 In the late 1990s this caused some friction, which was pointed out by nationalist politicians, such as Chávez. A lack of skilled workers in Venezuela was not a significant problem for the US in the 1990s. Chávez’s new constitution caused large strikes within PDVSA in 2002 and 2003. These strikes resulted in a dismissal of many employees and a complete overhaul of PDVSA by the Venezuelan government. Also a lot of high educated and skilled employees fled the PDVSA-company. After these strikes and the nationalization of PDVSA it became more difficult for companies to attract a skilled, qualified workforce.119
Acceptability
Environmental and political factors can change the way American politicians and people think about Venezuela, but to what extent a relationship is ‘acceptable’ depends on a lot of variables. There is no such thing as a fixed limit to the acceptability of energy trade, which will lead to intervention if this limit is exceeded. Before a country undertakes military action, other factors such as public opinion, costs, risks, prospects, national importance and opinions of other nations also play a significant role.120
Environmental
Most of the 1990s were characterized by stable or falling world energy prices, plentiful supplies of energy and relatively little public and political interest in energy policy issues.121 At the end of
116 Deloitte, ‘The talent crisis in upstream oil and gas’, Deloitte research studies (2005). 117 Ibidem.
118 Haggerty, Richard A., Venezuela: A Country Study (Washington 1990), (consulted: 6 March 2012).
119 Tinker-Salas Miguel, ‘Fueling concern: the role of oil in Venezuela’, Harvard International Relations Council
(2005).
120 Eichenberg, Richard, ‘Victory Has Many Friends: U.S. Public Opinion and the Use of Military Force,
1981-2005’, International security 30 no. 1 (2005) 140-177.
121 Joskow, Paul L., ‘US energy policy during the 1990s’, John F. Kennedy school of government, Harvard
