19 October 2013
Social Science 295
The Role of Oil in the International Political Economy
In the international spectrum, no single commodity, save perhaps the atomic bomb and other nuclear weapons, has held the economic and political importance that oil has held over the past one hundred years. Oil powers the world’s cars, trains, airplanes and to a large extent powers the world economy and some of its major political figures. Found in some of the most politically sensitive areas in the world, oil has inextricably become linked with some forms of economic and political power regardless of the instability present in the country that lies on top of it. Fluctuations in oil supply, price among other variables have arguably some of the greatest effects for one single good across the world’s many financial markets. In addition, oil and the control of it has generated some of the largest political and financial crises in the twentieth century, from the Iranian nationalization of its oil resources from the British to the energy crises of the late 1970s. When Mohammad Mossadegh nationalized Iranian oil production in 1951, the modern struggle between “East and West” for control of oil resources was accelerated and cemented in both the political and economic arenas the world over. To understand the prominent position oil occupies in today’s international political economy however, the history of oil as a commodity must first be explained.
Though oil as a natural resource had been around for thousands of years, it wasn’t until the 19th century that petroleum began to be utilized. Its initial purposes were very basic, namely heating and cooking. The Industrial Revolution and the invention of the internal combustion engine were the greatest catalysts in propelling oil to the most important resource in the world. While much of the initial production of oil was centered on kerosene and use within the household, by the mid 1850s the United States had begun...