US response to WWII Rubber Crisis, Lessons for Oil Needs Today

Sep 25, 2010
David J. Shestokas

T. Boone Pickens - Boone Pickens

In the years prior to US entry into WWII, Japan conquered the world's major supplies of rubber. 90% of the supply of rubber was cut off from the US.

Rubber was critical to any country involved in World War II. It was needed for tires, washers and electrical wire wrapping. War could not be waged without rubber. Natural rubber is the product of plants grown within 10 degrees of the equator and at the time of WWII, these plants were primarily cultivated in Southeast Asia. Japan made controlling these supplies a priority of its war strategy, and brought 90% of the world's natural rubber supply under its control.

When World War II began, there was no commercially alternative to natural rubber. Research was being conducted for an alternative, but in 1940, .4% of the US rubber supply was synthetic. When the Japanese denied US access to the world’s rubber supply, a substitute was needed for the US to be successful in the war.

Roosevelt Mandates Rubber Research, Government and Industry Cooperate

President Franklin D. Roosevelt knew of the US vulnerability due to the cutoff of natural rubber sources. In June 1940, he formed the Rubber Reserve Company (RRC). This company set objectives for stockpiling rubber, conserving rubber, and gathering used rubber.

At the time, the US had an inventory of about one million tons of natural rubber, and annual needs of about 600,000 tons. No process existed to produce massive quantities of synthetic rubber. Conservation and recycling could not fulfill the nation’s needs for rubber for domestic and military purposes.

When the natural rubber supply was lost to Japanese conquest, the RRC called for an annual production of 400,000 tons of general purpose synthetic rubber to be manufactured by the four large rubber companies. Twelve days after Pearl Harbor, Jersey Standard, Firestone, Goodrich, Goodyear, and United States Rubber agreed to share patents and information with RRC oversight.

Due to the cooperation between the government and the major manufacturers of rubber, domestic US production of one type of synthetic rubber increased from 3,721 tons in 1942 to 756,042 tons by 1945. Four years after Pearl Harbor, the United States had created an entire industry to replace a critical commodity that had fallen into the hands of interests hostile to the United States.

The 1973 Oil Embargo: OPEC Declares US to be "Hostile" Country

On October 16, 1973, the Organization of Petroleum Exporting Countries (OPEC) raised the price of oil by 70% and the next day announced an embargo on oil deliveries to the United States as a principal “hostile” country.

The reasons are many, including issues of Israel, left over colonial corporate dominance in the countries, religious issues and more. The key is this group had declared the US to be “hostile”. At the time, the US imported 28% of its oil needs. The results were major economic dislocations.

1979 Iranian Revolution: Oil Production Drops, More Hostility to US, Carter Draws Rubber Analogy

In 1979, there was a second major oil crisis, precipitated by the Iranian revolution. The Shah of Iran was overthrown and Iran came under the leadership of Islamic cleric, Ayatollah Khomeini. Hostages were taken in the US Embassy, and Iranian oil production fell by 4.5 million barrels a day, precipitating a world wide shortage, and another shock to the US economy.

It was clear that the lifeblood of the US economy was in the hands of interests hostile to the US. The US response was to encourage conservation, mandating fuel efficient vehicles and lowering speed limits nationally. In 1979, President Jimmy Carter made this bold statement: “Just as a similar synthetic rubber corporation helped us win World War II, so will we mobilize American determination and ability to win the energy war.”

In 2010, the US imports about 63% of its oil needs. Had President Carter been accurate, and there was the same dedication to replace the oil controlled by interests hostile to the US, as there was with rubber in World War II, than by 1984, OPEC would essentially have been out of business, and our interests in the Middle East over that intervening time would have been significantly different.

T. Boone Pickens Plan, Natural Gas, Delivery and Use Infrastructure

There are many alternative fuels for energy and transportation on the horizon, including solar, wind turbines, hydrogen, and electric cars. T. Boone Pickens has put together a comprehensive plan regarding all the nation’s needs for energy that relies on multiple alternatives to oil. A key component is a reliance on natural gas for the country’s transportation needs. It is a resource the US possesses domestically in abundance and has multiple environmental advantages

It costs OPEC pennies to get $71.00 out of the ground. They are maximizing their profit, but maintain the price low enough to discourage alternatives. Domestically produced alternatives (e.g. natural gas) are competitive in production cost, but the use and delivery infrastructure do not exist.

A national committment to such infrastrucure as a national security issue is needed. Keeping some $350 billion annually in this country would over time the difference of the infrastructure investment quickly. Oil would become dirt cheap, but we would not need it.