"Oil and Grand Strategy: Great Britain and Germany, 1918-1941"

Abstract

This study examines how oil shaped grand strategy in Great Britain and Germany between 1918 and 1941. The history of oil in the twentieth century is a chapter in the story of European decline. The emergence of oil accelerated Britain and Germany's decline as great powers capable of independently exerting their economic and military power. Having fought the First World War largely with oil from the United States, Britain was determined to avoid basing its energy security upon the goodwill of another great power. After 1918, London undertook a policy of developing alternative sources of oil under British control. In the future, Britain's key supplier would be the Middle East, already a region of vital importance to the British Empire. This quest for energy independence from the United States was a failure. The empire was bereft of oil, while Italian hostility threatened British transit through the Mediterranean. A shortage of tankers also forced Britain to import oil from U.S.-controlled sources in the Western Hemisphere, which depleted Britain's reserves of foreign exchange.

Germany could not import oil from overseas in wartime due to the threat of blockade, while accumulating large stockpiles was impossible because of its shortage of foreign exchange. The Third Reich based its oil supply on petroleum synthesized from coal, limited domestic crude oil production, and imports from Romania. By 1939, Berlin was confident that Germany had enough oil to fight a war first against the Allies and then the Soviet Union. Victory would allow the Third Reich to occupy the oilfields of the Caucasus and the Middle East, thereby creating the economic foundations for Germany to become a world power. This plan began to falter after the defeat of France, when Germany found itself responsible for meeting Europe's energy requirements while still at war with Britain. An escalating oil crisis in Axis Europe, a lack of strategic alternatives, and the imperatives of National Socialist ideology, all compelled the Third Reich to invade the Soviet Union in June 1941 to seize enough resources to fight Britain and eventually the United States before the balance of power turned against Germany.