The Energy Equation
Underlying the evolution of US-Arab economic relations in the twentieth century were the global and US supply and demand conditions of fossil fuels since the 1940s. Some of the most pertinent trends are: (1) the US production and consumption patterns of petroleum since the end of World War II, (2) US increasing reliance on imported oil and the development of the petroleum industry in the Middle East, (3) the regional and global long-term supply and demand patterns of petroleum and, (4) major changes in the structure of the world petroleum industry and market since World War II.
Before World War II, the Western hemisphere was the dominant oil producer and consumer in the world, led by the United States. As will be seen subsequently, postwar developments have turned this around, and in the 1960s, the Eastern hemisphere emerged as the world dominant producer and consumer of oil. 1 The Western hemisphere accounted for about four-fifths of the world's oil output in the 1920s and three-fourths during the 1930s. Major producers included the United States, Canada, Venezuela, and Mexico. During the latter part of the 1940s, the United States was the dominant producer and consumer of crude oil and petroleum products in the world, whether inclusive or exclusive of the formerly Eastern bloc countries. With an average annual production of 1,906 million barrels of crude oil during 1947-49, the United States alone accounted for nearly two-thirds of the combined production of all market-oriented economies. This situation existed simply because the United