Abstract: A Cooperative Venture: Aramco and the U.S. Government in the Desert Frontier, 1950-1955

Ellen Wald

Abstract

During World War II sufficient supplies of, and reliable access to, foreign sources of oil became a strategic necessity for the United States. By the war's end the government feared domestic oil production would soon be inadequate to meet the nation's new military and economic demands. American petroleum companies operating overseas provided the means to make up this shortfall. This paper examines State Department collaboration with the Arabian American Oil Company (Aramco) to secure the U.S. uninterrupted access to oil in the early 1950s. I argue that the two sides developed a relationship of "mutual insurance" in which, rather than exploiting each other, the government and the oil company acted as an insurer of the other's risk. This connection developed based not on exploitation, quid pro quo, or campaign contributions but instead grew organically based on aims shared by both the State Department pursuing American security interests and the oil company seeking profit. The paper examines three instances of conflict between Saudi Arabia and Aramco in which the State Department became involved to demonstrate the relationship's evolution and practice: contract renegotiations between Aramco and the Saudis, a clash over corporate restructuring, and negotiations between Aramco and the Saudis over oil prices.