Oil and the military: the challenge of leadership. (oil industry and the US military)

Thank you very much. It's an honor and a pleasure to be here with you tonight.

As a Naval Academy graduate, I have great respect for this fine institution, and for those select individuals who are chosen to attend.

Since I graduated from the Academy in 1950, my career has been focused on two enterprises that I care very much about, and which have a great deal in common: The United States Navy and the oil business.

The two have been intimately connected throughout this century, ever since oil began to fuel the industrial might that is the basis of America's role as a world power. It was fitting that, when Theodore Roosevelt proclaimed that role, he did it by sending the great white fleet around the world.

And it's no coincidence, in my view, that this hundred-year period of history has been called both "The American Century" and "The Century of Oil."

The latter is the name given to it by the author, Daniel Yergin. I hope you were able to see the recent series on public television, based on Mr. Yergin's book about oil, The Prize. It was fascinating.

In that book, he calls petroleum

"The motive force of industrial society and the lifeblood of the civilization it helped create."

Now the 20th century is marching toward its conclusion. And there are some who have questioned whether American power, and the role of oil in our civilization, might not be waning as well.

I have some strong convictions on those points. And that's what I'd like to share with you tonight.

It's hard to imagine what today's world would be like without oil. And it's even more striking to consider just how rapidly oil became the lifeblood of modern civilization.

The first oil well was drilled in 1859, in Pennsylvania. At first, oil's primary use was to make kerosene for lamps. But, by the beginning of this century, oil was beginning to be used as a powerful new fuel. And it was changing the world.

Oil powered the early motor vehicles of Daimler in Germany and Ford in America. It lifted the Wright brothers off the sands at Kitty Hawk. And it would inspire the most profound changes in warfare since the invention of gunpowder.

In 1911, at the instigation of the young First Lord of the Admirality, Winston Churchill, the Royal Navy switched from coal to oil, to power the ships that held together the British Empire.

Oil also made possible another military innovation championed by Churchill, the tank. Soon, the tank would make trench warfare obsolete. And, along with the airplane, it would turn "Blitzkrieg" into a household word a generation later.

While the second world war was fought over ideology, it was also fought, to a great extent, over oil. And its outcome, in both Europe and the Pacific, was determined largely by oil.

In 1940, in the Battle of Britain, Spitfires were fueled with 100-octane aviation fuel, which had been developed in the U.S. and the Netherlands during the 1930s. This provided the vital performance edge they needed to defeat the Nazi Messerschmitt 109S, which ran on 87-octane gasoline.

In 1941, Hitler ignored his generals' advice to take Moscow. Instead, he turned his troops south, lured by the oil fields of Baku, in the southern Soviet Union, only to have them run out of fuel before they could get there.

The Allies exploited Germany's vulnerability in oil. In 1944, two days after the Normandy invasion, U.S. General Carl Spaatz directed that

"The primary strategic aim of the United States strategic air forces is now to deny oil to enemy armed forces."

Germany's …