In 2007 and 2008, the price of oil skyrocketed, hitting historic
highs. The corresponding increase in gas price was felt sharply in the
United States by ordinary people, industries, the military and the
government. Citizens were spending more and more of their paychecks to
fill their gas tanks, airlines grounded planes to avoid the high cost
of fuel, and the military saw its daily price tag for the wars in
Afghanistan and Iraq increase due to fuel costs. The U.S. military
depended almost exclusively on oil to power its weapons and vehicles.

Economists the world over debated whether this sudden price jump was
caused by supply and demand dynamics, market speculation, or the weak
dollar. In addition, debate intensified over whether the world was
hitting peak oil,—a time when global oil production capacity would

If strategy is about gaining and maintaining control of destiny
through managing the balance between influence and dependence, the
United States. faced an increasingly dangerous strategic situation in
2008. Although the nation. had traditionally been strongly influential
in the oil industry, by 2008 it seemed that this influence had waned.
U.S. oil production had been decreasing steadily since the mid 1980s,
and the United States was losing clout as a customer as developing
nations like China and India began buying increasing amounts of oil. As
a result, the nation was potentially facing a situation of strategic

The strategic imperatives facing the U.S. in 2008 were 1) to gain
more control of the forces driving the United States‘ increased
dependency on oil, especially foreign oil, and 2) to take decisive
action to significantly reduce dependency on oil as a major source of
energy within the shortest possible time.

To develop a greater understanding of the strategic challenges
facing the U.S. in 2008, Andrew S. Grove, Business School lecturer in
management and emeritus chairman and CEO of Intel; Robert A. Burgelman,
Edmund W. Littlefield Professor of Management; and Debra Schifrin, case
writer and researcher at the Business School, authored a paper that
complies the key facts and figures, as well as key contextual factors,
to describe global and United States’ energy and oil consumption, the
history and evolution of the oil industry, the global oil marketplace
in 2008, and the relationship between U.S. oil consumption and national
security. The authors argue that this greater understanding will
facilitate taking the decisive strategic actions that the situation
calls for.