Page 459 - Arabia the Gulf and the West

456 Arabia, the Gulf and the West

acquired to build up a strategic oil reserve, too great a portion of it was simply
consumed in profligate domestic use. It is really little short of scandalous that
the United States should consume so disproportionate a share as she does of the

oil produced in the world each year, and it is equally reprehensible that as the
senior partner in the Atlantic Alliance she should have ignored the economic
and strategic interests of Western Europe in committing herself to a com­

prehensive arrangement with Saudi Arabia over oil, the implications of which
may well prove formidable. Britain likewise has shown a cynical indifference to
the welfare of her European partners and allies by the restrictive practices she
has followed with respect to the extraction and disposition of oil from the

North Sea fields, and by insisting upon the maintenance of a substantial
minimum price for it. It is wholly against the interest of Western Europe, and
still more of that of the poorer countries of the world, that oil prices should
remain at their present high levels.

What the United States, Western Europe and Japan should be aiming at in
concert is the target indicated by Thomas Enders of the State Department in
1975? when he drew attention to the menace implicit in the mounting financial
surpluses of the Arab oil states. ‘It is in the interest of the industrial countries-

indeed, of all consuming countries’, Enders wrote, ‘that conditions be created
in which OPEC loses and cannot subsequently regain the power to set oil
prices at artificially high levels.’ A sine qua non of this strategy is that the
industrial nations should reduce their excessive dependence upon Middle-

Eastern oil by cutting their oil consumption in absolute terms, by intensifying
the search for new oil reserves, and by developing and utilizing more efficiently
existing alternative sources of energy. Even a sizable reduction in oil consump­
tion, however, will not release the industrial nations, still less the economically

backward countries of Asia and Africa, from the financial straitjacket into
which they have been strapped by exorbitant oil prices. A fall in demand for oil
will merely induce OPEC to raise prices, if it can, to compensate for the drop in
revenues. The more aggressive members of the cartel, notably Persia, Libya,

Kuwait and Algeria, have made this plain on several occasions. Yet any severe
increase in prices might well prompt a correspondingly severe fall in consump­

tion and a further loss of revenue.
OPEC is not a monolith. Its thirteen members - Algeria, Iraq, Kuwait,
Libya, Qatar, Saudi Arabia, UAE, Persia, Nigeria, Indonesia, Venezuela,

Ecuador and Gabon - all have divergent ambitions and requirements; none is
the natural partner of the others, not even its Arab members. T e very
diversity of its membership, and the inevitable tensions that will arise now

the OPEC governments have taken full control of oil production,
cartel vulnerable to disruption. Until recently the Western oilh the
served as a buffer to reduce or absorb potential causes of fnction g .
cartel’s members. They still serve this function althougi to ad h^

extent They could, if they wished, abandon it altogether. As