Oil for Containment

Even the most astute student of Cold War history might fail to connect America’s Marshall Plan directly to Middle Eastern oil. Yet oil was key to the “origins, operations, and impact” of the 1947 initiative, writes David S. Painter, a historian at Georgetown University. The policies put in place as part of the effort to rebuild Europe fostered an unprecedented dependence on oil from Saudi Arabia and other countries in the Middle East.

Until World War II, Europe relied on coal for more than 90 percent of its fuel. The war shifted patterns of energy use toward oil, and by 1945 much of the crucial continental transportation network and an increasing number of factories relied on it.

America was the world’s leading oil producer when the war ended, accounting for two-thirds of global production. As Europe’s ruined factories and transport systems struggled to rebound, the price of oil rose and the bills were due in dollars. The fledgling economic recovery appeared threatened.

Dollars were scarce in the European states, and oil gobbled up more of them in most countries than any other single item. The nearby Soviet Union—once a leading oil producer and now in effective charge of the energy supplies of its Eastern European satellites—looked like a tempting supplier for the Western Europeans. American leaders, already in a Cold War mode, feared that the dollar shortage would increase economic distress, boost support for communist parties, and possibly push some of the desperate Western Europeans into the arms of the energy-rich Soviets.

The Marshall Plan provided some $1.2 billion for oil, more than 10 percent of the total aid extended under the program. But the Americans didn't want to sell Yankee oil abroad. Europe’s oil appetite was so voracious that U.S. officials feared it would siphon off supplies needed at home. Seventy-five percent of the petroleum financed from the principal account in the Marshall Plan came from “offshore sources.” The Arabian American Oil Company, 30 percent owned by Standard Oil of New Jersey (later Exxon), particularly benefited from the arrangement, as Saudi Arabian annual production rose from about 90 million barrels to 278 million in four years. By 1950, 85 percent of European oil imports came from the Middle East, and assuring access to Persian Gulf oil became a pillar of Western foreign policy.

The Truman administration’s role in setting energy patterns and helping oil companies and oil-producing states in the Middle East has been little acknowledged, according to Painter. The Marshall Plan offered Western Europe the energy supplies to recover from the war. At the same time, “control of oil played an important role in establishing and maintaining U.S. preeminence in the postwar international system.”

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The Source: "The Marshall Plan and Oil" by David S. Painter, in Cold War History, May 2009. 

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