Rising Energy Costs Complicate U.S. Diplomacy

In addition to affecting U.S. consumers, energy prices are also influencing U.S. diplomatic efforts. Secretary of State Condoleezza Rice says the politics of energy policy are particularly complicated.

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The high price of oil is costly not just to American consumers, but also to U.S. diplomacy, as NPR's Michele Kelemen reports.

MICHELE KELEMEN reporting:

Though she was once on the board of directors for the Chevron Corporation, and certainly knows the politics of oil, Secretary of State Condoleezza Rice told Congress recently she's been surprised by how much the tight energy market has complicated her work.

Secretary of State CONDOLEEZZA RICE: Nothing has really taken me aback more, as secretary of state, than the way the politics of energy is, I will use the word warping, diplomacy around the world. It has given extraordinary power to some states that are using that power in not very good ways for the international system, states that would otherwise have very little power.

KELEMEN: She didn't name countries, but Venezuela was likely on her mind. The Bush administration often complains about Venezuela's influence in the region. David Victor, of the Council on Foreign Relations, says Russia has also been emboldened by high oil prices, which have allowed a much more activist policy in its region and on the world stage.

Dr. DAVID VICTOR (Council on Foreign Relations): The Russian government is able to basically pursue its own policy, because it has enormous revenues coming from the sale of oil and gas overseas. Whereas, if you rewind the tape of history and go back to the late 1990s, when the oil price was very low, the Russian government was actually in receivership.

KELEMEN: The power of oil comes in cycles, according to Daniel Yergin who's writing a new book about the geopolitics of oil.

Dr. DANIEL YERGIN (Cambridge Energy Research Associates): When you have prices high as they are today, and you have a very tight market, this takes on a whole significance that it wouldn't during a time of lower prices, indeed, five or six years ago when oil prices were $10 or $15 a barrel, the notion of oil and power was something that had really receded, and seemed to be not only out of fashion but over.

KELEMEN: Today's tight energy market is certainly complicating some aspects of the Bush administration's agenda, particularly when it comes to Iran's nuclear program. The U.S. ambassador to the United Nations John Bolton, expressed frustration that it took three weeks just to get Russia and China to agree on a Security Counsel statement on Iran. Bolton says Iran has been using its energy card well.

Ambassador JOHN BOLTON (U.S. Representative, United Nations): Particularly with countries with high and growing energy demands, like India, China and Japan--and clearly what they're trying to do is to get these and other countries into commitments of large-scale capital investments of oil and natural gas resources in Iran, in effect, to reduce the flexibility of these countries.

KELEMEN: Secretary Rice says the oil crunch has not only given new power to oil producers, but has also sparked more assertive diplomacy by countries in need of energy.

Secretary RICE: It is sending some states that are growing very rapidly in all out search for energy, states like China, states like India, that is really sending them into parts of the world where they've not been seen before. And challenging, and I think, for our diplomacy.

Mr. ROBERT E. EBEL (Chairman, Energy Program, Center for Strategic and International Studies): I don't think they're challenging our diplomacy. I think they're challenging our companies to compete.

KELEMEN: That's Robert Ebel, chairman of the energy program at the Center for Strategic and International Studies. He says China is investing in countries where U.S. companies don't, in Iran and Sudan, for instance. While this may complicate diplomacy, China's investments do add to the world oil supply, which, experts say, is good for U.S. consumers.

Daniel Yergin of the Cambridge Energy Research Associates also thinks the story about China's energy needs is being overplayed.

Dr. YERGIN: There's a lot of focus on China and India's energy needs and how they're going to meet it internationally, and it's great material for movies and thrillers, and so forth. But you do have to see this in scale.

KELEMEN: And as other experts point out, if the Bush administration is worried about how the tight energy market affects its agenda overseas, it can do something about it at home, by promoting fuel efficiency.

Michele KELEMEN, NPR, Washington.

MONTAGNE: This is NPR News.

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