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• Bibliographical Essay: Richard Stroup and John Baden, Property Rights and Natural Resource Management
• I: Natural Resources and Property Rights
• Indian Water Rights
• Resources and Bureaucrats As Predators
• Government Energy Conservation
• Timber, Property Rights, and Government
• The Reclamation Service's Tahoe Fiasco
• Mineral Rights and Government
• Market Protection of Property Rights
• Government Water Planning
• Indians, Property, and Conservation
• Political Or Voluntary Ecology?
• II: War, Peace, and Empire
• American Foreign Policy
• Oil and Government Policy
• War, State, and Nation
• Early U.s. Indian Policy
• U.s. Foreign Policy and Latin America
• Reform, Progressives, and Empire
• Harry Elmer Barnes and Revisionism
• Imperialism and War Technology
• Pietistic Vs. Pragmatic Foreign Policy
• Atomic Warfare and Human Suffering
• Vietnam: Cost-benefit Warfare
• III: Political and Social Philosophy
• Plato and Constitutions
• The Uses of a Political Myth
• Florentine Guilds and Republicanism
• Machiavelli, Corruption, and America
• Hume and Contract Theory
• Corporations: a Contractual Paradigm
• Smith, America, and Utilitarianism
• People, Freedom, and State In Hegel
• Freedom and Virtue
• Nineteenth Century Spanish Liberalism
• Victorian England and Laissez-faire
• O'connell, Anti-slavery, and Freedom
• Carnegie and Spencer
• Republicanism Vs. Liberal Individualism
• Rousseau's Social Contract and Freedom
• Artistic and Cosmic Harmony
• Pound and Politics
• Ideology and Classes

Oil and Government Policy

Burton I. Kaufman

• Kansas State University

“Mideast Multinational Oil, U.S. Foreign Policy, and Antitrust: the 1950s.” The Journal of American History 58(March 1977):937–959.

Both the administrations of Harry S. Truman and Dwight D. Eisenhower utilized American-controlled multinational oil companies as instruments of American foreign policy in the Mideast. At the end of World War II, government officials sought to use the oil companies to achieve five interrelated policy objectives: (1) to grant financial aid to Arab governments; (2) to assure American control of global oil trade; (3) to secure for the U.S. a reliable source of crude oil at a reasonable price; (4) to enhance the American economic and political presence in the Mideast; and (5) to prevent the spread southward of Soviet influence into the area of the Persian Gulf. While this policy was effective in the 1950s, by the 1970s it was no longer so.

Of additional historical importance, this policy is fundamental for an understanding of the full impact on the U.S. of the Soviet-American confrontation in the years after the Second World War. It also makes clearer the role of the Korean War in crystallizing ideas about the nations of the Third World, both as bastions against Communist expansion and as sources of raw materials. This emerging policy also reveals the extent to which government (as much or more so than business, since business pushed direction of developments) sought to promote and benefit from the government-business partnership so apparent after the War.

Finally, these policies, in the context of the Cold War, had an enormous effect on the nation's antitrust program which both administrations sought to pursue. The Truman and Eisenhower administrations in theory attempted to enforce a vigorous foreign antitrust policy, based upon a commitment to Wilsonian principles of international free trade. Under Truman, the Justice Department had gone so far as to begin bringing criminal indictments against some of the major oil companies because of their control of oil in the Mideast. The Cold War, and the need to work with and through these oil companies, however, caused both Presidents to alter the direction of this rigorous antitrust program. The criminal proceedings were dropped by Truman, while Eisenhower later “granted the oil multinational corporations certain immunities from the antitrust laws in the production, refining, and distribution of foreign oil.”

These policies gave an advantage to the large oil companies as against smaller, independent producers, either American or foreign, and helped them to maintain their dominance of oil in the area. In a more general sense, such actions undercut a major goal of antitrust policies, to help stimulate competition, especially for the smaller businessman. Such a policy caused considerable concern among some officials within both the Justice Department and the Federal Trade Commission.

At the international level, this policy undermined any arguments which were offered in favor of free trade and against international cartels. It is probable that the cartel, in effect created by these arrangements, offered a model for, and thereby contributed to, the later formation of the Organization of Petroleum Exporting Countries (OPEC), as it simply took over the cartel and gained control of global supplies of oil.

The Korean War institutionalized the policy of containment and greatly expanded the already growing powers of the Executive. This in turn further expanded the government's involvement in the economy, for foreign aid to Third World nations meant encouragement of private investment, through “such schemes as investment guarantees and various tax credits.” In the Mideast, in particular, this meant a controversial plan whereby taxes by Aramco oil to the U.S. were paid to Saudi Arabia instead.

Finally, it was the crisis in Iran in the early 1950s which helped to push such decisions as that of relaxing the antitrust policies. When the Iranian government moved against British Petroleum, the American government moved to increase the role of American companies in that nation. This in turn gave the companies a basis to argue against the antitrust proceeding then building up against them. In finally taking that line because of national defense, there is some evidence that Truman later believed he might have been duped by the National Security Council. But Eisenhower continued these policies.