Jack Kelly

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The coming ‘War for Oil’

http://www.NewsAndOpinion.com | If I were you, I'd be trading in that SUV for a compact, and getting familiar with bus schedules. The Iraq war wasn't a war for oil, but the next phase of the war on terror very well may be.

The Iranian seizure of three British patrol boats in disputed waters of the Shatt al Arab, and the beheading of Lockheed-Martin contractor Paul Martin in Saudi Arabia suggest the bad guys have an oil price strategy.

As I write this, the Iranians are threatening to put the 8 British sailors they captured on trial. This is a replay, in miniature, of the 1979 hostage crisis in which followers of the Ayatollah Khomeini seized the U.S. embassy in Tehran.

The beheading of Paul Johnson by the local al Qaida affiliate is likely to hasten the departure of Westerners from Saudi Arabia, which would have a deleterious effect on oil production there. (Saudi managers excel at drinking coffee, not engineering.)

Michael Ledeen thinks the Iranian attack on the British sailors was also oil-driven.

"The Brits were laying down a network of sensors to detect the movement of ships toward major Iraqi oil terminals," he said. "The Iranians considered that a bit of a threat. So they attacked."

The mullahs felt threatened because they were planning to attack the Iraqi oil terminals themselves, or to assist al Qaida operatives in doing so, Ledeen said.

"They want to defeat President Bush in November, and they figure if they can get the price of oil up to around $60 a barrel, he'll lose to Kerry," Ledeen said. "Not to mention a considerable side benefit: At $60 a barrel, they can buy whatever they may be lacking to get their atomic bombs up and running."

A slowdown in Saudi production also would exert considerable upward pressure on oil prices, since Saudi Arabia has a quarter of the world's known reserves, and is the only producer in the world capable of substantially increasing production.

The relationship between the Saudi royal family and al Qaida remains murky. The Saudi regime has declared its enmity to the terrorists, but there is a difference between declaring enmity, and practicing it. Al Qaida has attacked Westerners in the kingdom with apparent impunity. But it has yet to attack either the oil production facilities or members of the royal family.

The current al Qaida policy of attacks on non-Muslims in the kingdom helps both al Qaida and the royal family. It keeps the price of oil artificially high, without destroying valuable assets. The Saudi royals are as eager to get rid of Bush and his talk of democracy in the Arab world as are Osama bin Laden and the Iranian mullahs. They just have to be more subtle about it. If al Qaida should turn on the Saudi government, "it is far from certain that the corrupt geriatrics who run the country will be able to head off the threat to the Saudi industry's ability to protect a steady supply of oil," said Irwin Steltzer, director of economic policy studies at the Hudson Institute.

Saudi production facilities are well protected, but by troops of uncertain loyalty and dubious competence, and we have seen in Iraq how difficult it is to protect pipelines from well-trained saboteurs.

A prolonged shutdown of Saudi production would send a shock through the world's economies comparable to that of the Arab oil embargo of 1973, which nearly quadrupled oil prices.

There are no alternative sources of energy that could fill the void, Steltzer said.

"I was asked many years ago at a gathering of government and industry experts to lay out an energy policy for America, to cope with a supply interruption," Steltzer said. "Two words: aircraft carriers."

The key to preventing this nightmare is a firm response to Iran's provocation, thinks the web logger Wretchard of the Belmont Club.

"Although the Iranians may try to dominate the agenda with the usual television parade of hostages and prisoners... the only real question should be how to humiliate the mullahs," Wretchard said. "They should be made to remember this day so that if their miserable theocracy lasts another ten years they can never bring themselves to look at a calendar opened to the month of June without trembling."

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JWR contributor Jack Kelly, a former Marine and Green Beret, was a deputy assistant secretary of the Air Force in the Reagan administration. Comment by clicking here.

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