An oil change

January 12, 2003

LET'S TAKE a look at oil. It's the one crucial ingredient in the world's economy, and two-thirds of the world's oil is in the region surrounding the Persian Gulf. Both the United States and Great Britain deny that the crisis over Iraq is about oil - but there's no question that the future of the oil business will be profoundly affected by what happens there in the months to come.

The key, of course, is Saudi Arabia, with its giant reserves. For several years now, American policy-makers have been growing increasingly concerned about the Saudi connection. World consumption of oil is expected to rise by nearly 50 percent in the next 20 years, with most of the new demand coming from China and India. With luck, some of that demand can be met by new sources in Central Asia, but the Department of Energy nonetheless expects that two decades from now the Persian Gulf will be supplying an even larger proportion of global oil than it does now.

But can the Saudis be relied on?

The Bush administration's answer, since its earliest days, has been straightforward: Better not count on it.

The public report issued by Vice President Dick Cheney's energy task force, in May 2001, called for increased reliance on natural gas and nuclear energy and the promotion of alternate sources of oil - in Africa and particularly the Caspian. Other voices in Washington said much the same thing. The aim, put simply, has been to loosen Saudi control over the world's oil.

Yet, in its chapter on "national energy security," the Cheney report concedes that "the gulf will be a primary focus of U.S. international energy policy."

Sept. 11 was a wake-up call. Most of the hijackers were Saudis, as is Osama bin Laden. The country's anti-Americanism, Islamic fundamentalism and slippery court politics became impossible to ignore. What if Saudi Arabia were lost to extremists? Or what if Saddam Hussein decided to immolate the place?

If America should lose its access to Persian Gulf oil, the alternatives aren't pretty. A pipeline from the Caspian will snake across the volatile and largely lawless southern flank of the Caucasus Mountains, through Azerbaijan and Georgia to Turkey. It will be within spitting distance of Iran to the south and Russia to the north. Russia itself, the world's second-largest producer of oil, is hoping to sell more to America, and that's all to the good - but few in Washington would be content to place most of America's oil security into a Russian basket.

Enter Iraq.

Mr. Hussein's regime sits atop the world's second-largest proven reserves of oil. Whatever the administration's motives are, if the United States succeeds in implanting a more pliable government, it will have created a powerful check on Saudi oil ambitions in a way that both the Saudis - and, incidentally, the Russians - can easily understand.

Some in Washington also have talked openly about Iraq as a sort of domino of free-market democracy for the whole region. Who might be affected? Saudi Arabia, of course, but don't forget Iran. Iran has oil, too - and it also has secure and unhindered access to the Caspian.

You can almost hear the pieces falling into place.

Maybe all of this is simply a coincidence. But there could be a legitimate issue here, and one with a lot more relevance than the specter of biological and chemical weapons in the hands of a madman. That's not to say that war is the best course of action. But let's talk about it - honestly and publicly.

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