When China’s Haiyang Shiyou 981 oil rig sailed into waters off the Paracel Islands in May 2014, it provoked an international crisis. Hanoi insisted that the rig was operating illegally in Vietnamese territory. Both countries sent naval and fishing vessels to enforce their claims. Commentators predicted that the two states might come to blows.
The confrontation died down, but a critical question remains: Do countries fight over oil resources?
The question isn’t just pertinent to the South China Sea. The Arctic, Caspian, East China Sea and eastern Mediterranean have all been identified as potential “hot spots” for international oil conflicts. Numerous conflicts, including Iraq’s invasion of Kuwait, Japan’s invasion of the Dutch East Indies in World War II, Germany’s attacks against the Russian Caucasus in the same war, the Iran-Iraq War, the Chaco War between Bolivia and Paraguay, and even the Falklands War, have been described as international “oil wars.”
However, contrary to the conventional wisdom, the risk of international oil wars is slim. Although oil is an exceptionally valuable strategic and economic resource, fighting for it does not pay.
The belief that countries fight for oil rests on a flawed foundational assumption: Countries reap the same benefits from foreign oil resources as from domestic oil resources.
In reality, profiting from oil wars is hard.
Countries face at least four sets of obstacles that discourage them from fighting for oil: invasion costs, occupation costs, international costs and investment costs. Invasion costs are the damage that wars inflict on oil fields and infrastructure. Occupation costs arise from local resistance to foreign occupation, which can target oil industry infrastructure and personnel. International costs are imposed by the international community, which can respond to oil grabs with economic sanctions and military interventions. Investment costs are the challenges of attracting foreign capital and technical expertise to occupied oil fields.
Collectively, these four sets of costs dramatically reduce the payoffs of fighting for oil and the appeal of oil wars. When the many other costs of war, including manpower and materiel, are taken into account, fighting for oil becomes even less attractive. From a purely rational standpoint, countries shouldn’t launch oil wars.
But, countries don’t always act rationally. To test the oil war hypothesis, we have to take another look at historical so-called oil wars.
Closer examination shows that oil has not been the fundamental cause of any international wars. The Falklands War in 1982 was triggered by national pride and Argentine officials’ fear that their window of opportunity for retaking the islands was closing. Rather than fight over oil, Britain and Argentina tried to use it as a catalyst for cooperation. In the 1970s and 1990s, they tried to jointly develop the Falklands’ oil resources.
The Iran-Iraq War, from 1980 to 1988, was also not an oil war. Iraq initially aimed only to gain control over the Shatt al-Arab waterway and 130 square miles of contested territory. In the early stages of the war, Iraq repeatedly offered to withdraw from Iran, if Tehran would accept those demands. However, Iranian officials accused the Iraqis of fighting for oil in order to discredit them internationally.
The Chaco War, from 1932 to 1935, was also launched for other reasons. Bolivia and Paraguay knew that oil discoveries in the Chaco region were unlikely. They fought because of national pride and to avoid further territorial dismemberment, after major losses in the 19th century. The oil explanation didn’t appear until the war bogged down, when leaders tried to transfer responsibility for the devastating conflict onto international oil companies.
On three occasions, countries have launched major military campaigns targeting oil resources. However, these were fundamentally wars for survival, not for oil. In World War II, Japan invaded the Dutch East Indies and Germany attacked the Russian Caucasus because leaders realized that, without more oil, their regimes would collapse. Japan would have to withdraw from China, which was “tantamount to telling us to commit suicide,” as Japanese Foreign Minister Togo Shigenori put it. Hitler was even more succinct: “Unless we get the Baku oil,” he stated, “the war is lost.”
Iraq’s invasion of Kuwait in 1990 was a war for survival. Contrary to popular beliefs, Saddam Hussein was not attempting to greedily grab more oil resources. Instead, he was afraid that the United States was trying to overthrow his regime. The United States had supported the Kurds’ rebellion in the 1970s, perpetrated the Iran-Contra scandal in the 1980s, and by 1990, seemed to be squeezing Iraq economically. According to Hussein, the United States was driving down oil prices by directing Kuwait to exceed its OPEC production quota.
Hussein believed that seizing Kuwait offered the only means of eluding the United States’ hostile designs. By controlling his neighbor, Hussein could raise oil prices, escape his economic crisis and regain domestic support. He knew that the maneuver was a long shot. Regime records show that Hussein expected the United States would try to force him out of Kuwait. Still, it was either that or regime collapse. As Hussein’s deputy, Tariq Aziz, said after the war, “You will either be hit inside your house and destroyed, economically and militarily. Or you go outside and attack…”
Japanese, German and Iraqi leaders believed that they were fighting wars for survival. Participants in other so-called oil wars were fighting for additional reasons, like national pride. None of the conflicts were driven by oil ambitions.
This is good news for contemporary international relations. Oil competition in areas like the South China Sea is not a serious threat to international security. Countries may engage in minor oil spats, like China and Vietnam’s rig confrontation, to reinforce their resource claims. However, these incidents will not escalate into international wars.
There is also little risk of oil imperialism. Countries like China will not satisfy their oil needs by seizing foreign oil fields. Historically, leaders have only initiated oil grabs when they believed that their survival depended on it. This condition is exceedingly rare, even in wartime. And, it’s unrelated to the price of oil. The United States considered grabbing Middle Eastern oil in 1975, after the first energy crisis drove up prices. However, the Ford administration refrained, because the costs of aggression were too high.
Lastly, oil won’t inspire great power wars. The United States and China may eventually come to blows. Some of their military campaigns may target oil resources, if controlling them seems necessary for regime survival. However, oil will not be the fundamental cause of a Sino-American conflict. It’s not worth fighting for.
Emily Meierding is an assistant professor at the Naval Postgraduate School in Monterey, Calif. (as of July 2016).