Page 448 - Arabia the Gulf and the West

The ‘Sting* 445

$2,000 million. The loss to Persia, on the basis of her production and revenues

for lhe same year, would have been about $6,600 million. Obviously, with the
higher oil prices obtaining in the summer of 1979, the loss of revenue would be
correspondingly greater, perhaps by as much as 50 per cent. While the richer
oil states might be able to bear the strain, the less wealthy and more populous
could not. Nor would the richer states’ clients (notably Syria, Jordan and the

various Palestinian organizations) forgo their accustomed subsidies with good
grace.
That the Arab members of OPEC would have to resort to such extremes to

secure the acquiescence of the West in any price rise is, however, highly
unlikely. The inevitability of continual price rises is now accepted by the West
with much the same fatalism as that with which an Australian aborigine, at
whom the bone has been pointed, accepts the certainty of impending death.
Indeed, most public commentators on the subject go further and take a

perverse pleasure in enumerating the economic tribulations which are about to
be visited upon the sinful and self-indulgent West by the avenging angel of
OPEC. Two comparatively recent examples of these attempts at self-fulfilling
prophecies of doom may suffice to illustrate the kind of thing to be found in

most leading newspapers and journals of opinion in Europe and North
America in any week of the year.
An article in The Times on 16 June 1978 - graced, naturally, with a large
photograph of Shaikh Yamani - gloomily speculated about forthcoming oil­

price rises, on the basis of predictions in the oil industry of a 6-10 per cent
increase in world consumption of oil at the outset of 1979, and of a 15-20 per
cent increase in the 1980s. That the former figure would equal and the latter
greatly exceed the average annual rate of increase in the boom years up to 1973

was not mentioned by the writer. Nor did he attempt to reconcile the predic­
tions with the existence of a surplus of heavy crudes on the market over the
preceding eighteen months. Instead, he chose to wax indignant on behalf of the
OPEC producers over the persistence of this surplus. ‘The oil states, in short,
are tired of carrying the brunt of the oil glut, fed up of being treated as free

storage warehouses by Western consumers.’ What, one might ask in some
'wonderment, had become of the arguments about oil in the ground being the
est,investment open to the oil states? What of the moral virtues of ‘conserva-

Uon . To this, the writer had an answer of sorts. ‘Conservation of reserves’, he
hi ?rmed.his readers ‘. . . inevitably means higher prices. As OPEC sees it,
*8 er prices will both help to conserve reserves and encourage the develop­
ment of alternative energy sources.’ In confirmation of this agreeable prospect,

of °n t0 qU0te from r^e annual report of OAPEC for 1978 on the question
b er world consumption in the 1980s. ‘Production and price policies must
lives would create the necessary economic incentives to extend the
r„S ° Present reserves and increase investments for creating new
^serves.