Energy issues have figured prominently in Governor Romney's campaign. Achieving "North American energy independence" has been a central pillar of the 5-point economic plan that he's been touting -- including at last week's first presidential debate. A bit surprising, then, that in the governor's October 8th foreign policy speech, with its heavy emphasis on the Middle East, energy didn't even merit a mention.

Let's face it. Ensuring the free flow of oil has been the main driver of American strategy in the Middle East for decades. Our nation's economic wellbeing depends on a well-supplied global oil market, and countries in the Middle East account for a significant portion of the world's production. The cartel they dominate, OPEC, today controls between 30 and 40 percent of the international market while possessing the vast majority of the world's proven reserves.

As a result, America and the global economy are incredibly vulnerable to what happens in the region. Every U.S. recession but one since World War II has been preceded by an oil price shock. And in the majority of cases, those shocks have been triggered by events originating in the Middle East. Think the 1973 Arab oil embargo, the 1979 Iranian revolution, or Saddam's 1991 invasion of Kuwait.

But you don't have to go back that far to appreciate the problem we face. Last year's revolution in Libya, along with broader unrest across the Arab world, sent oil prices skyrocketing. Ditto Iran's threats in January to blockade the Straits of Hormuz. And concern about an eventual war with Iran continue to impose a significant risk premium on global prices, a reality Americans confront every day at the gas pump. Even short of tipping the economy back into recession, the effects of this kind of price volatility are highly negative: our trade deficit rises; disposable income and consumer spending decline; and economic growth takes a significant hit.

Concerns about oil prices have often badly distorted U.S. policy toward the Middle East. The most acute example is the effort to pressure Iran to give up its nuclear weapons ambitions. U.S. policymakers have long known that the most effective step we could take against the mullahs is to cut off Iran's oil sales and starve them of the enormous revenues they need to keep their repressive regime afloat. Yet for years, first President Bush and then President Obama fiercely resisted sanctioning the Islamic Republic's petroleum sector. The reason? Because they quite legitimately feared that removing Iranian crude from the market would disrupt global supplies and trigger a devastating price shock. Only in late 2011, with Iran rapidly approaching the nuclear threshold, did Congress finally steamroll the administration by forcing through legislation that targeted Iranian oil.

Even then, implementation of the sanctions was watered down. The administration was given a six-month grace period to assess the possible impact that sanctions would have on the global oil market. And rather than demanding that customers of Iranian oil end their purchases entirely, countries were granted waivers from U.S. sanctions if they only "significantly reduced" their buy -- which in practice required them to cut back between 15 and 20 percent. While the U.S. effort, together with complimentary EU sanctions, have no doubt had a major effect on Iran's economy -- reducing its oil exports by as much as 50 percent -- a full embargo would have been far more impactful and the obvious course of action for Washington to pursue if not for the countervailing concern about oil markets. In the meantime, the Iranian regime continues to pocket perhaps $3 billion per month from the million or so barrels of oil that it still exports daily, all the while pressing ahead with its nuclear program.

America doesn't have a higher national security priority than stopping the world's most dangerous regime from going nuclear. And yet the sad reality is that our dependence on oil has for years, and to our great peril, systematically deterred us from fully deploying the most powerful tool in our arsenal -- all-out sanctions on Iran's petroleum sector -- for resolving the crisis peacefully. Not surprisingly, that underlying logic applies in spades when it comes to any discussion about the possible use of force against Iran, where predictions of oil spiking to an economy-crippling $200 per barrel are commonplace.

The fact that our oil vulnerability has put such severe constraints on our freedom-of-maneuver to address the most pressing national security threat we face is deeply troubling. The big question is whether we can do anything about it. Admittedly, history doesn't offer much reason for optimism. For almost 40 years, successive U.S. presidents have promised to tackle the problem with very little to show for it.

Of course, what's different today is that the United States is experiencing an oil and gas boom that promises to transform our energy landscape in very fundamental ways. Thanks to American ingenuity and technology, U.S. production is poised to increase dramatically over the next decade, after years of steep decline. As Governor Romney has correctly emphasized, through close cooperation with democratic allies in Canada and Mexico, the goal of energy self-sufficiency for North America may well be within reach -- an unthinkable prospect just a few years ago, and one whose benefits in terms of job creation and economic growth could be quite profound.

In addition to the potential economic windfall, however, we also need to be thinking hard about how we can best exploit the coming energy boom to really enhance U.S. national security. That's a much more difficult task. The fact is that because there's a global market for oil, Middle East crises are likely to threaten the U.S. economy with major price spikes no matter how much of our own crude we produce. Just look at Canada and England. While both are oil independent, they remain exposed to the same price volatility that currently afflicts the United States. Their economies will be no more insulated than ours if a war with Iran sends the cost of oil through the roof.

It seems that what really needs to be part of the mix is a viable, bipartisan, market-driven strategy for reducing the monopoly that oil has over our transportation sector. If a sensible way could be found to begin moving some significant portion of U.S. cars and trucks to run on cheaper, domestically produced alternative fuels -- natural gas, methanol, electric -- it would largely eliminate the sword of Damocles that Middle Eastern tyrannies like Iran now hold over the West's economic wellbeing and its strategic decision-making. That would put us on the path toward true energy independence, and restore to the United States a degree of flexibility, leverage, and strength to pursue its interests and values abroad, especially in the Middle East, that we have not known for at least a generation.

All much easier said than done, I know -- especially in an environment where energy issues, like the national budget, have become so politically charged. Nevertheless, hope springs eternal. Perhaps once the upcoming election is over, a new administration will be prepared to look seriously at developing a bipartisan, comprehensive energy strategy that both fully exploits America's new oil and gas bonanza while taking meaningful steps to reduce our vulnerability to extortion by hostile, repressive dictatorships in unstable parts of the world.

If it is, one place that a new president should definitely look to mobilize ideas as well as political support is Securing America's Future Energy (an organization that I'm proud to advise), which has brought together an extraordinary group of American business and military leaders to highlight both the economic as well as national security dangers posed by our dependence on oil, and to recommend possible solutions. Co-chaired by Fred Smith, CEO of FedEx and General P.X. Kelley, former commandant of the Marine Corps, the group includes such luminaries as General Jack Keane, former vice chief of the Army; Admiral Dennis Blair, former director of national intelligence; David Steiner, CEO of Waste Management; Herb Kelleher, founder of Southwest Airlines; and John Lehman, former undersecretary of the Navy. A pretty hard-nosed bunch, to be sure, that has decades of experience operating on the front lines of the global economy and national security, and is convinced that America can and must get after this challenge as soon as possible.

For the country's sake, we should all hope that they're right.

What does the ongoing BP oil spill imbroglio in the Gulf have to do with the war in Afghanistan? Probably not much, from the vantage point in the United States. But here in London this week, the two issues are being linked in some ways that should be worrisome for the Obama administration. 

Two particular stories have featured in headlines in the major U.K. newspapers this week: BP's plummeting share price from President Obama's rhetorical attacks, and the London visit by Secretary Gates and General Petraeus urging a continued strong U.K. troop commitment to the NATO mission in Afghanistan (followed by Prime Minister David Cameron's surprise visit to Afghanistan today).  Separate though they may be, the two stories are combining to produce one narrative in the minds of many British citizens: the Obama administration is attacking a pillar of our economy while urging us to sacrifice even more blood and treasure in Afghanistan. 

BP of course bears the most blame for the catastrophic spill, as well as responsibility for stopping it and remedying the damage. And in the first few weeks after the rig exploded, there was little sympathy for BP even here in the United Kingdom. Most U.K. media coverage initially focused on the horrific environmental damage being wrought as well as the Obama Administration's apparent insouciance as the oil continued to gush.

But now that attacking BP (or "British Petroleum" as Obama calls it, even though that has not been the company's name since 1998) has emerged as a core tactic in the Obama Administration's scramble to arrest their own falling political fortunes, they risk doing real damage to relations with a key ally and the largest non-U.S. troop contributor to Afghanistan.

As recently as two months ago, BP was Britain's largest company by market cap, and is a core holding of most British pension funds. In other words, it is not just BP executives or investors in the City who take a hit when BP's share price plummets, but also every average Brit who has any type of stake in a retirement fund.  Which is most of the country -- many of whom have also grown weary and skeptical of their nation's military role in Afghanistan. 

Last week had already demonstrated one unintended consequences of the administration's intensifying campaign against BP: the vocal attacks that drive the share price down also erode billions of dollars in market value and diminishes the resources BP will have available to pay for the damage, clean-up, and compensation. The White House needs to be mindful of not going too far and triggering a second unintended consequence of further eroding British support for their force posture in Afghanistan. Fortunately at the U.K. end, Prime Minister Cameron, at least up to this point, is trying deftly to strike a balance and not further escalate tensions with the United States either over BP or over Afghanistan.

Pursuing a unified grand strategy is always a hard task, but this situation shows even more acutely the challenges of linking domestic and foreign policy such as the Obama administration's National Security Strategy attempts to do. Last week it was American strategic interests in Asia that got short shrift, as Obama cancelled (again) his Australia/Indonesia trip to focus on the BP spill. This week it is the U.S.-U.K. relationship that is suffering, as a beleaguered White House tries to shore up its domestic political standing at the expense of relations with a key ally.

By John Hannah

Are the Saudis prepared to constrain oil prices to weaken Iran? It's an intriguing possibility that, if implemented, could have major implications for U.S.-led efforts to curb the Islamic Republic's nuclear program.

In no small part because of a weakening dollar, oil prices have risen for most of the past year from a low of close to $30 per barrel to around $82 per barrel last week. But since then, prices have been slowly sliding back, dipping below $77 yesterday. Most media attributed Thursday's decline to a report that U.S. oil inventories had increased higher than expected, and that U.S. consumers continued to reduce energy use in a still sluggish economy. No doubt true. But other factors have been at play as well.

Specifically, the near-record stockpiles of oil that currently exist not only in the United States, but across the developed world, have been made possible by the fact that OPEC has been increasing output at the fastest pace in two years. Earlier this week, Bloomberg reported that the cartel has boosted production more than a million barrels a day since March -- despite the worst global recession since World War II. OPEC's largest producer, the Saudis, have helped lead the way, increasing exports four out of the past six months. Saudi output has increased almost 300,000 barrels per day since earlier this year. Overall OPEC production reached its highest level in 10 months in October.

The Saudis have said that $75 per barrel is an appropriate target price. This week, a Saudi government advisor told the press that, at over $80 per barrel, prices had reached "the high end of our range" and any further rise could prompt the Kingdom to further tap its unused capacity -- which currently stands at approximately 4 million barrels a day.

The Saudis have publicly explained their effort to moderate prices as a function of their desire to protect a fragile global economy. But it's hard not to notice that the Saudi strategy also has the side benefit of pinching Iran. Specifically, while the Saudis in 2009 require an average oil price of about $51 a barrel to cover their budget, Iran needs an average price in excess of $90. If the price holds steady at the Saudi-designated range of $70-$80 for the rest of this year, the Saudi treasury could come in with a slight surplus. The Iranians, by contrast, have reportedly been forced to consider phasing out food and energy subsidies in an attempt to battle their looming fiscal problems.

Of course, reducing subsidies on essential commodities is almost always political dynamite -- especially in a place like Iran, where the economy is already in a shambles, and where millions of Iranians have taken to the streets since the fraudulent June 12 elections to make known their hatred of the current regime. The fact is that the Islamic Republic is desperate for increased cash flow that could be used to buy off as many of its disaffected citizens as possible and cover up its gross economic mismanagement. Saudi determination to limit any price spike -- for whatever reason -- is clearly an impediment.

With daily exports in the range of 2.5 million barrels per day, Iran stands to lose about $900 million annually from every one dollar drop in the price of oil. With excess capacity of 4 million barrels per day, the Saudis are clearly in position to go much farther than they have to date in squeezing Iran if they so choose. An aggressive Saudi effort to depress oil prices well below the current $75 target could prove extremely harmful to Iran's already reeling economy and tumultuous political situation. Almost certainly, such an effort could inflict as much pain on the Iranian regime as many of the sanctions currently being discussed by the United States and its international partners -- and, given Russian and Chinese reluctance to get tough with Iran, would almost certainly be quicker and easier to implement.

Would the Saudis really be prepared to play hardball with Iran in this way? In the past, the answer has usually been no. Taking big risks to offend more powerful neighbors has generally not been the Saudi way. A transparent effort to inflict major damage on the Iranian economy would certainly incur the Islamic Republic's wrath. The Saudis no doubt recall that a similar charge about depressing oil prices led Saddam Hussein to invade Kuwait in 1990. Even if an Iranian military attack is not likely in the cards, the Saudis have good reason to fear the kind of mischief Iran could cause within the Kingdom -- especially among the large, potentially restive Shiite population that is concentrated in its oil-rich Eastern Province.

That said, there's no doubt that Saudi King Abdullah views Iran -- and the near-term prospect of its acquiring nuclear weapons -- as nothing short of an existential threat to the House of Saud and its preeminent position in the Islamic world. There's at least some chance that he may be prepared to consider doing things now that in the past would have been unthinkable in order to prevent his worst nightmare from coming to pass -- especially if he's provided sufficient support, encouragement and guarantees from the United States and our major European allies.

In this regard, the current crisis in Yemen, in which Saudi forces have been drawn into combat on their southern border against Iranian-backed Shiite rebels, has only upped the ante. As with almost everything Iran does, Abdullah no doubt perceives the Islamic Republic's involvement in Yemen as the latest maneuver in a grand strategy whose ultimate target is the Kingdom itself and control of the Islamic holy sites of Mecca and Medina.

The big question is how far the Saudis are willing to go in drawing on their oil power to really do something about it -- something, that is, that actually stands a chance of either 1) compelling the Iranian regime to fundamentally re-calculate its nuclear ambitions, or 2) speeding the regime's unraveling at the hands of its already seething population. Of course, encouraging the Saudis to use oil as a political weapon is not without its downside risks; after all, the United States was on the receiving end of just such a Saudi gambit during the oil embargo that followed the 1973 Arab-Israeli war. But given the enormity of the stakes now at play vis a vis Iran -- both for the Kingdom and for the United States -- it's clearly an option that at least deserves serious consideration. One hopes that it's already the subject of intense consultations between Washington and Riyadh, preferably at the highest levels. Should the United States conclude that the potential benefits outweigh the risks, it will need to muster every instrument at its disposal to steel the Saudi king to take unprecedented measures to face down Iran's unprecedented challenge.               

Scott Nelson/KAUST via Getty Images