The price of oil is now very high, and it became very high very rapidly. Some blame "speculators," without realizing how small is the amount of money that speculators take -- see Philip K. Verleger -- while almost all of the rise in price goes to the oil-producing states. It would hardly be surprising, either, to discover that the Saudis and other Arabs were in fact behind some of these speculators, and were even employing them. After all, the speculators not only run the price up, but become the object of criticism that deflects from fury at this handful of plutocratic states. These states, by the way, have far tinier native populations than they give out. The real populations of Qatar, with its natural gas, and the constituent parts of the U.A.E., for example, are at most a few hundred thousand, with Qatar being far less. This means the per-capita take is even greater than has been given out. If the real figure were to be known, it might increase the fury against these statelets, and people might begin thinking that all of these places could be taken over by a well-armed Western brigade or two, backed by air support. Saudi Arabia consistently exaggerates its native population, for fear that others would realize just how weak, how vulnerable, and how very very rich, its population is.
Despite the endlessly-recycled pictures of President Roosevelt meeting the Saudi king (Ibn Saud, or his father, or one of his sons, it hardly matters), which are meant to show that Saudi Arabia and the United States go way back and are still "allies" today, Saudi Arabia is not, and was not at the time of that meeting, and never has been, and never possibly can be, an "ally" of the United States. It can, very occasionally, appear to share some interests. Its manipulation of the Americans in such situations has been fascinating. The most obvious case is in Afghanistan, where the Americans appeared to believe that they and the Saudis had an interest in supporting the local muhajedin against the Soviet army, and collaborated in supplying those muhajedin. But what prompted the Saudis was not hatred for Soviet totalitarianism, but hatred for Infidels. When the Soviets left, the Saudis, along with the U.A.E. (a constant sidekick in so many ventures), supported to the hilt the Taliban. The views of the Taliban, you may recall, on what constitutes a rightly-ordered society, and on the treatment of women and of non-Muslims (the remaining Hindus were forced to put yellow identifying marks on their clothes "for their own safety"), did not correspond to the American conception -- at all.
Long ago, back in 1973, the American government should have recognized that the phrase "oil is a weapon" was false. For oil is fungible. In fact, the supposed Arab oil boycott was ineffective -- see J. B. Kelly, "Arabia, the Gulf, and the West." But it was effective in fooling and confusing the West into thinking that if it began to do the bidding of the Arabs, or at least tried not to antagonize them, that somehow this would be reflected in "price moderation." It was nonsense then, and it is nonsense now. The Saudis, as the swing producer (with a lot more to "swing" then than they do now, where their excess production capacity hardly exists, and they are blowing smoke about it just to inflate their power, like a frog blowing up its throat to impress would-be predators), always made the same calculation: what price X, at time T, will maximize the total value of Saudi reserves over time? In doing this, they kept in mind current budgetary needs, and also carefully watched what effect price rises, of various conceivable sizes, had on:
1) overall oil demand;
2) oil exploration and production elsewhere;
3) short and long-term investments in other forms of energy, including nuclear plants, solar energy, wind, and so on;
4) changes in political will to effect, including a willingness to subsidize, those alternative forms of energy, including nuclear, solar, wind;
5) the political will to subsidize mass transit systems and to rebuild train systems as a carrier of both freight and passengers; and
6) the political will to tax gasoline, and thereby encourage, much earlier, and in a more predictable manner, the use of smaller cars and less reliance on cars.
And you can add to this a half-dozen or another dozen considerations, and someone else can add a dozen more.
But then came all those who were in the pay of the Saudis -- those "public relations advisers" such as the Kennedy apparatchik Fred Dutton, or those ex-diplomats (see James Akins), or former intelligence agents (see Raymond Close), or all those corporations that went to bat for Saudi Arabia. There was the famous AWACS sale. The leader was United Technologies, ably assisted by Whitney Corp., with the first a supplier of arms to the Saudis, and the second a builder and maintainer of hospitals in Saudi Arabia. There were all those businessmen who were so eager for Saudi contracts. Then there are all those fixers, the ones who as soon as they leave "public service" decide, as they grotesquely put it, "to make some real money" -- insultingly for the rest of us, who would be delighted to have their government salaries. These include such people as the founder and participants in Kissinger Associates, selling essentially its Who-Do-You-Know expertisee, that is, its ability to contact and influence people in the government. Then there are the Carlyle boys, and all the other fixers and promoters and wheeler-dealers who have convinced themselves, because they are so eager to "recycle" Arab oil money, that Saudi Arabia is our "friend" and "ally." And they have made that nonsense our official attitude, one encouraged in the ready-to-repeat-any-platitude and largely mindless press.
So here we are today, with oil at $140 a barrel, which is no doubt right where it should be. But it should be at that price because we ourselves, beginning back in 1973, began to tax oil, and tax gasoline use, and had made a smooth transition to that price, reducing oil use and having subsidized mass transit, and train track rebuilt all over. (Try to get from Portland, Maine to Lawton, Oklahoma by train as you once could -- just try.) Long ago we should have given subsidies to solar energy companies that went under without those subsidies -- though they were bringing down the price, and doing everything right (for example, there was Becker's pioneering Luz).
The Saudi Lobby is the most powerful lobby in Washington. More generally, the Arab Oil Lobby is the most powerful lobby in all the capitals of the Western world. Powerful people everywhere have been bought up. As a consequence, there has hardly been anything like an intelligent, long-term energy policy, one that made geopolitical and environmental sense (they go, as it happens, together; they are, as it happens, almost identical).
And the results we can now see all around us, as we frantically flail, and fail, and flail again, unable to grasp the enormity of what was not done over the past 35 years, slowly and intelligently, and now must somehow be done in great haste and mental desarroi.
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