ROBERT PELLETREAU: U.S. national security interests in the Persian Gulf are several. One is the great reliance of the Western industrial countries on oil from that region.

SHIBLEY TELHAMI: We are estimated to be spending anywhere from $30 to $60 billion on our strategy to defend oil in the Gulf.

ANNA AURILIO: The biggest problem with oil use and the biggest problem with driving inefficient cars is that we are contributing to global climate change brought on by increasing the levels of carbon dioxide in our atmosphere, and there's no doubt about that.

CHRIS FLAVIN: In some sense, global warming is the ultimate security threat in the sense that it could undermine local climates, undermine food supply, flood many areas and literally drive some people out of their homes.

NARRATOR: Under the banner of national security, U.S. troops have often gone to battle in the Middle East. Why? To safeguard access to the century's most precious oil.

It appears the U.S. is ever ready to fight for oil. But what are the true costs of our oil addiction? And can the United States ever become independent from its reliance on the Middle East for "black gold?"

["AMERICA'S DEFENSE MONITOR" program introduction.]

Admiral JOHN SHANAHAN (USN, Ret.): I'm Vice Admiral Jack Shanahan, director of the Center for Defense Information.

True national security depends on a military capable of ensuring the survival of the United States as a free and independent nation. National security also includes a strong domestic economy, sound political and social structures, as well as a healthy environment.

NARRATOR: The flow of oil has shaped the politics and power of the 20th Century. Oil has fueled the industrial age -- and fanned the fires of war. Oil transformed a desert into a kingdom of riches for the nations of the Middle East that sit upon the world's largest supply of petroleum.

As the world's largest consumer of oil, the United States has long had a profound interest and military commitment in the Middle East. While the U.S. has continued to rely on Middle East oil, our allies in Europe and Japan are even more dependent, but the United States is providing the security blanket.

SHIBLEY TELHAMI: The outcome of the Gulf War was that we have a major American presence in the Persian Gulf that has been accepted and we now have the establishment of a fleet, which is the Fifth Fleet, designed to stay there.

NARRATOR: Shibley Telhami, director of the Near Eastern Studies Program at Cornell University, is a visiting fellow at the Brookings Institution.

Mr. TELHAMI: There has not been a debate about what the security interests of the U.S. in the Middle East are and you would think that there would be a major debate now in light of the end of the Cold War, and in light of the Arab-Israeli peace process, and in light of the fact that a good portion of the military budget is going for planning for contingencies in the Persian Gulf.

ROBERT PELLETREAU: Well, I think it's been a combination of new opportunities and new dangers since the Cold War.

NARRATOR: Robert Pelletreau is assistant secretary of state for Near Eastern Affairs.

Secretary PELLETREAU: The new opportunities come in the better prospects for making peace between Israel and the Arab parties. The new challenges come from both ethnic conflicts that break out and from a number of countries that are developing their own ambitions to dominate in specific areas of the world.

In the Gulf, it is now an inherently unstable area because both Iraq and Iran have ambitions to be the dominant power in that very strategic area.

NARRATOR: Before the Gulf War, the U.S. had about 450 military personnel in the Persian Gulf region. Since that time, in a quiet but massive deployment, the United States has stationed 9000 troops on land, most of them in Saudi Arabia, and another 15,000 at sea. Hundreds of U.S. warplanes and dozens of warships patrol the region. Large supplies of war materials are permanently based there and upwards of 50,000 U.S. troops a year participate in joint military exercises with our Gulf allies.

Mr. TELHAMI: We are estimated to be spending anywhere from $30- to $60 billion on our strategy to defend oil in the Gulf. I think immediately we could cut the budget by half and I don't think it would matter. I mean, frankly, I don't think that we need to spend all that money on a contingency which is not very likely.

Secretary PELLETREAU: Let me put the military deployment in a slightly larger context. What we need to do in the Persian Gulf is to establish a framework of deterrence, so that neither of these potential threats, the Iraqi threat or the Iranian threat can threaten the moderate Gulf states.

Mr. TELHAMI: It can prevent them from carrying out overt military operations against the Persian Gulf, but no sensible person that I know argues that Iran in the immediate future poses a serious military threat to the Gulf. No one that I know makes that argument.

Secretary PELLETREAU: It is true that they have had to cut some of their weapons purchases through lack of financial resources to go ahead. That does not indicate a lack of will or a change of policy.

NARRATOR:The Clinton administrations describes its security strategy towards Iran and Iraq as a policy of "dual containment." Because the U.S. does not maintain diplomatic relations with these two nations, the policy relies on a growing military presence, strict UN sanctions, and the selling of arms to our allies in the region -- Kuwait, Bahrain, Qatar, United Arab Emirates, Oman and Saudi Arabia. Between 1990 and 1995, these countries agreed to purchase about $72 billion in U.S. weapons, equipment and military construction.

Mr. TELHAMI: There are some states who want arms, but there are a lot of states who feel that those arms are being sold to them solely for the purpose of improving the arms industry in the U.S..

Secretary PELLETREAU: We have not been promoting arms sales as such, but we have been engaged in a program to strengthen the defensive capabilities of our friends and allies in the Gulf, yes.

NARRATOR: For the U.S. military, preparing for another Persian Gulf conflict is one of the linchpins of a post-Cold War strategy of preparing to fight two regional wars simultaneously. Some critics point to the inability of military might to deal with the potential instability that could arise from the lack of democracy among our allies in the Gulf, like Saudi Arabia.

Other critics of our "dual containment" policy towards Iran and Iraq believe there's a danger in the U.S. establishing itself as the Persian Gulf's policeman. The presence of a large foreign army could create a backlash from Arabs who view the U.S. as imposing its will and cultural influence.

Mr. TELHAMI: Dual containment is not designed as a reward and punishment strategy; there's no carrot in it. It is basically a policy where the only carrot is not using a bigger stick. I mean, basically, what you are saying to Iran is we're going to get you and if you don't behave yourself, we're going to get you even more. And if you were in Iran's position, you can see their incentives to want to disrupt American policy in the region, and they can do that subversively. Not overtly, not certainly through invasions, which they can't do in any case.

IRA SHORR: As an ambassador, as a diplomat, do you think it would be easier to deal with Iran and Iraq if we had full diplomatic relations?

Secretary PELLETREAU: I don't think either of those countries is in any doubt about what our policies are or in any doubt about what we would require to bring about a change in those policies and establishment of diplomatic relations. I hope someday those governments will be more friendly, will be not be supporting terrorism and threats of various natures, and that we would have more normal relations.

Mr. TELHAMI: I do think those are serious threats. I do think that you have to think about them. The question is, is the best way to pursue that through a policy of confrontation or is it through a policy of incentives to integrate these states into the international community?

NARRATOR: While national security analysts seek alternatives to military confrontation in the Persian Gulf, energy analysts see other risks to U.S. security -- economic and environmental -- that come from an increased reliance on Middle East oil.

JOSEPH ROMM: The typical projection is that the world's going to need 20 million barrels a day more of oil by the year 2010, 80 percent of which will come from the Persian Gulf.

NARRATOR: Joe Romm is a deputy assistant secretary of energy.

Secretary ROMM: The question is how do we want to deal with our energy problems? Do we want to deal with it by having a war every several years and sending American soldiers over to fight in the Persian Gulf, and the huge amount of expenditures, tens of billions of dollars a year that that entails? Clearly, you need to have an approach that reduces American dependence on foreign oil.

NARRATOR: Americans awoke to their dependence on the Persian Gulf in October 1973, when Arab oil ministers imposed an oil embargo on the United States. Gas lines, shortages and price hikes showed the threat to our economic security that came from being energy-dependent.

We are currently importing more oil than ever before -- 51 percent of what we consumed in 1995. And if our current consumption patterns continue, by early in the next century the U.S. could be importing more than 70 percent of the oil we consume, the vast majority of it to fuel our affair with the automobile. It's a relationship that has its good and bad days.

And no matter how low the price of gasoline might appear today, our oil addiction doesn't come cheap.

Secretary ROMM: Since 1973 we have imported more than a trillion dollars in oil. That is a huge outflow of money, that if it had been kept domestically in the United States would have created millions and millions of jobs.

ANNA AURILIO: There has been a huge impact on our trade deficit because of our oil dependence.

NARRATOR: Anna Aurilio is an environmental advocate at the U.S. Public Interest Research Group.

Ms. AURILIO: From 1974 to 1992 they estimated that sending money overseas for imported oil accounted for 70 percent of our trade deficit.

NARRATOR: For policy analysts like Aurilio, there are hidden costs to our inefficient use of oil, costs that are not reflected at the gas pump. For example, the more oil we import, the greater the chance for oil spills.

And there are the threats to human health and the environment. The United States burns 17 million barrels of oil a day, one-quarter of total world consumption. Two-thirds of that is burned by cars and trucks. And in the process, carbon dioxide, nitrogen oxides, carbon monoxide and other pollutants are released into the air.

Ms. AURILIO: Many of us know that on a hot summer's day it can become difficult to breathe. Folks that have asthma have a lot of problems. There are actually health warnings and health alerts that go out telling people to stay indoors. Much of the smog is actually caused from burning oil.

CHRIS FLAVIN: In some sense, global warming is the ultimate security threat.

NARRATOR: Christopher Flavin is vice president for research at the Worldwatch Institute and has written extensively on the greenhouse effect.

Mr. FLAVIN: We pay for cheap gas in terms of the kind of lung damage that comes from air pollution, in terms of the hundreds of billions of dollars of cost that may come from climate change.

NARRATOR: The hottest issue that surrounds the use of fossil fuel is whether it is human activity, particularly the burning of petroleum products, that is causing global warming. The ten hottest years in recorded human history have all occurred since 1980. And 1995 was the hottest year on record.

Global warming occurs with the emission of carbon dioxide and other so-called greenhouse gases trapping the sun's warmth in the lowest layers of the atmosphere, thus heating up the planet. With its 100 million cars and relatively inefficient use of oil for heating purposes, the U.S. has per capita carbon dioxide emissions nearly twice as high as those in Western Europe and five times the world's average. But the dangers of global warming recognize no boundaries.

In 1988, the United Nations formed the Intergovernmental Panel on Climate Change, comprised of independent scientists from around the world to advise the world's governments on whether human activities are contributing to global warming and what the consequences might be. In September 1995, the panel issued a report, saying for the first time that human activity is a likely cause of the warming of the global atmosphere and that the earth has entered a period of climatic change that is likely to cause widespread economic, social and environmental dislocation over the next century if greenhouse gases are not reduced.

Mr. FLAVIN: All of the computer models that are used to analyze this suggest that we're going to see some dramatic transformations in the years ahead, including disruptions to global agriculture, forests and probably some substantial problems to coastal communities which will have more severe hurricanes, as well as rising sea levels, which will tend to inundate some areas.

Rep. DAN SCHAEFER (R-CO): As a matter of fact, we've held three hearings on it up to this point in time. Global warming.

NARRATOR: Representative Dan Schaefer is chairman of the Energy and Power Subpanel of the House Commerce Committee.

Rep. SCHAEFER: If you talk to scientists, they're going to have different opinions on whether we really have global warming or do we not have global warming.

Mr. SHORR: Do you personally feel it's a significant threat?

Rep. SCHAEFER: I don't think so, at this point in time. I do not agree with what they are saying because I have not seen the scientific evidence of this.

Mr. FLAVIN: I think people are really beginning to get the picture. I think if you go to most parts of the world and ask people is the climate today the same as it was 20 years ago, most people will say, no, it's not the same, we have more summer heat waves, we have more extreme storms.

Rep. SCHAEFER: I had an opportunity to visit the Antarctic, down in the South Pole on the ice. I talked with some scientists that were out there that were studying the glaciers. And I asked them, I said do you see any effect of a receding in these glaciers. No, they were not receding, as a matter of fact, they were expanding. All I'm saying is I'm not convinced that we do have a problem, because I can give you the same number of scientists on the other side that say, no, we do not have a problem.

NARRATOR: Environmentalists maintain that as the world's super-polluter, the U.S. has a greater responsibility to develop ways to cut back its oil use. Anna Aurilio believes that we can learn from our own history.

Ms. AURILIO: CAFE standards are corporate average fuel economy standards for cars and light trucks. They were first passed in 1975 and the effect of these standards was to double the efficiency of automobiles. We went from about 14 miles per gallon to cars that went to 27.5 miles per gallon. That's the current standard. So, we saw a dramatic increase in automobile fuel economy from 1975 to 1985. We saved lots of oil. We saved lots of money. And then it flattened out. There were no more further increases in the standard.

Secretary ROMM: Well, there are two reasons, one of which is that the Reagan administration basically froze and rolled back fuel efficiency standards. The second is that the price of oil dropped. And the third is, to be honest, that the Reagan administration dramatically cut the funding for efficient automobiles.

Ms. AURILIO: If we raise CAFE standards by 60 percent, we can save more oil than we import from all foreign sources.

NARRATOR: But left to their own devices and sensing that low oil prices had lessened the public's demand for more fuel efficient vehicles, auto manufacturers directed their technological talents towards making cars and trucks with more power. Lower fuel standards for light trucks, which have taken over 40 percent of the domestic market, mean America's current passion for sport utility vehicles, minivans and pick-ups translates into greater oil consumption, dirtier air and greater dependence on imported oil.

Bucking the present trend toward less regulation of industry, policy analysts like Aurilio would like to see the federal government mandate that vehicles be built that get more miles to the gallon.

Ms. AURILIO: I'm an engineer. I believe in American ingenuity. I believe that if we set ambitious standards for cars, the engineers will figure out how to do it. And not only that, we've actually taken a look at the technologies that are available in today's market and shown how you could take a car like a Ford Taurus, use existing technologies, things that are already being used in cars on the road today, and jack up its fuel economy dramatically by 40 percent with relatively small increases in the cost of the car.

Rep. SCHAEFER: Well, this is very good to say that you want to raise it from 27 miles per gallon to 40 miles per gallon, but the internal combustion engine just won't do it unless you make a car that looks like a cracker box made out of a tin can.

Secretary ROMM: From 1975 to 1985, we doubled the fuel efficiency of cars and the cars got significantly safer. I think you see the opportunity for a lot of technologies to make cars safer.

NARRATOR: Responding to international calls for reductions in oil use and greenhouse gas emissions, the Clinton administration put together a Climate Change Action Plan, which angered energy efficiency advocates because it backed away from mandating higher fuel standards or raising gasoline taxes, the two actions environmentalists felt would most easily cut oil use.

Secretary ROMM: The Clinton administration and the Department of Energy have taken a voluntary approach.

Ms. AURILIO: We knew that CAFE standards were doomed when we began reading reports that the auto industry enjoyed a better relationship with the Clinton administration than it had with the Reagan and Bush administrations.

NARRATOR: Where the Clinton administration did break with past administrations is in calling for increased funding for the development of alternative fuels and alternative vehicles.

Secretary ROMM: We are in the process of demonstrating with Amoco and the National Renewable Energy Lab a process for taking waste and -- crop waste and waste paper and converting it to ethanol at 60 to 70 cents a gallon. At that point, you have a real opportunity to use domestic waste to make cost-effective alternative fuels.

NARRATOR: The Department of Energy is also working on a fuel cell which combines oxygen from the air with hydrogen from water to produce electricity to power electric vehicles.

Rep. SCHAEFER: I firmly believe in the renewables. I firmly believe that we have to continue the development of renewable energy because someday, we all know, if we don't start looking at it now, oil is going to be there no more.

Secretary ROMM: The biggest problem is that the congressional plans are to take us continuously down, so that we cut 60 to 80 percent of our budget, at which point we would essentially be abandoning the market for fuel efficient, super efficient cars and alternative fuels. The fuel cell is a technology that the United States Government has spent hundreds of millions of dollars on. It would be a tremendous irony if just as they were about to be competitive, we pulled out of the market and let foreign companies snap up our best technologies.

Ms. AURILIO: I think these budget cuts are going to really hurt our chances to become independent from Middle East and foreign oil.

NARRATOR: Proponents of new technologies like to say that there are vast reservoirs of oil under Detroit waiting to be tapped by developing highly fuel efficient vehicles, like the so-called "hyper-car," sporting an engine that would run on both gasoline and electricity and could get over 100 miles to the gallon.

New vehicles, new fuels, greater reliance on mass transit. The potential for reducing worldwide oil use is there. Indeed, the International Panel on Climate Change concluded that the barriers to meeting pressing threats to environmental security were neither technological nor economic. They had to do with government policy.

Mr. FLAVIN: Now in terms of automobile fuel efficiency, of course, the automakers have fought against standards and all sorts of programs to move in that direction.

Ms. AURILIO: The people who hold the power in the halls of Congress are the people who give big bucks to congressional campaigns. The auto industry and the oil industry have done a marvelous job of keeping both their subsidies and their way of life and their way of manufacturing protected.

Rep. SCHAEFER: I don't think it's the role of the federal government to tell individual industries or corporations that you have to do these particular things.

Mr. SHORR: Referring to that, the petroleum and the oil industry have enormous sums of money, as you know, to promote their views. How does their clout in Congress compare with the clout of environmental organizations?

Rep. SCHAEFER: Well, probably, at least in the past 40 years -- or, well, let's say 20 years, the environmental clout has been much more than the oil and gas industry's clout.

NARRATOR: But all that clout has not helped overcome Congress's current passion for cutting environmental and alternative energy programs, programs that advocates believe are critical to enhancing U.S. environmental and economic security.

Secretary ROMM: By some accounts, we are spending $20- to $30 billion a year or more on the military side of the equation in the Persian Gulf. The Department of Energy's budget for alternative fuels and advanced transportation technology is of the order of $200- to $300 million.

Mr. SHORR: Million?

Secretary ROMM: Million. So, we are talking smaller by a factor of 100. I mean, it's really astonishing that the Republicans would cut $50- to $100 million from our budget to avoid the next Persian Gulf War, and then they would add $7 or $8 billion to the Department of Defense's budget. It makes no sense at all.

Ms. AURILIO: On the eve of the Gulf War, as we were preparing to send our young men and young women over to fight to protect our Mideast oil supplies, the U.S. Congress, and particularly the U.S. Senate, refused to raise CAFE standards. And again, had they raised CAFE standards, had they raised auto fuel economy standards, we would have saved so much oil that we would no longer need to import oil from the Middle East.