The Magazine

Can We Do Without Saudi Oil?

Alas, no.

Nov 19, 2001, Vol. 7, No. 10 • By IRWIN M. STELZER
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SO NOW WE KNOW: The Saudi Arabian regime is no friend of ours. Sure, they sell us oil and tell us that they keep the OPEC cartel from pushing prices through the roof. But their refusal to go along with OPEC price hawks is self-serving. They have huge wealth stashed away in investments here and in other Western countries, which means that they don't want oil prices to go so high as to trigger a serious recession that would depreciate the value of those investments.

So the Saudis grumble when oil prices hit a "low" of $20 but keep selling the oil that costs them somewhere between $2 and $5 per barrel to find and produce. And they worry that even that level of exploitation of the world's consumers--a profit of $15 per barrel isn't exactly chopped liver--is not enough to support the lifestyles of thousands of indolent princes, while at the same time continuing to bribe the country's work-averse young masses with the free telephones, water, almost-free gasoline, and other goodies that keep them from overthrowing the monarchy. Saudi Arabia's budget, which counts on oil exports for 70 percent of its revenues, will be in deficit this year, in good part because of princely payments to the royal family and handouts to the restless and unemployable Ph.D.s in Islamic studies being churned out by the nation's religious schools.

As Prince Bandar, the kingdom's ambassador to the United States, pointed out in an unguarded moment--of which he has very few--when a democracy's leaders lose touch with the people, they lose their jobs; when a monarchy's leaders lose touch with their subjects, they lose their heads. Which is why the royal family (numbering by some estimates as few as 7,000, by others as many as 30,000) got so nervous when Sheikh Hamoud al-Shuaibi, a Saudi cleric, seemed to include the royals in his recent declaration of a holy war against "whoever supports the infidel"--a category that might well include a regime that allows American soldiers to be stationed in Saudi Arabia, even if they are there to protect the country from being overrun by Iraq.

And which is why, as a number of devastating articles in the weeks since September 11 have made clear, the rulers of this land that sits atop 25 percent of the world's proven reserves of oil have been playing a double game. Even as the Saudi regime has accepted American protection and nurtured its longstanding relationship with Washington, it has also been playing footsie with the organization that murdered thousands of Americans in the World Trade Center and the Pentagon.

This means that when we finish with our work in Afghanistan, if we take seriously George W. Bush's pledge to root out those who harbor terrorists or support them in any way, we will eventually have to decide what to do about Saudi Arabia. We will have to take seriously Crown Prince Abdullah's August letter to President Bush, in which the Saudi ruler wrote that "a time comes when peoples and nations part. . . . It is time for the U.S. and Saudi Arabia to look at their separate interests." Great idea.

BUT WHAT ABOUT that oil? If push comes to shove can we do without it? Not a chance. America consumes almost 19 million barrels of oil every day, and produces fewer than 8 million. The balance comes from overseas suppliers, with Canada and Saudi Arabia each providing some 15 percent of our imports, Venezuela 14 percent, Mexico 11 percent, Nigeria about 8 percent, and Iraq about 6 percent.

We are, it should be noted, dependent not only on those countries from which we buy oil directly. Oil is a fungible product, and a shutdown of production in any country, even one from which we buy little oil, will affect the price we pay our own suppliers.

To say that not all of the nations on which we rely are exactly friendly to the United States is an understatement. The Saudis can be counted on so long as the regime in place is one that needs the money from oil sales. But it is not clear that the valves would remain open were bin Laden's crowd, or its equivalent, to take over. To those folks, cash would be less attractive than injuring the United States: They seem, for instance, to prefer caves to palaces. We know that Iraq, second to Saudi Arabia with almost 11 percent of the world's known oil reserves, wishes us ill, and periodically manipulates production to raise prices. Venezuela, which ranks with the Saudis in importance as a source of our imported oil, is run by a president whose hero is Fidel Castro, who is dedicated to bringing down "Western imperialism," and whose support of bin Laden is so overt that Washington has been compelled to recall our ambassador "for consultations."