STRAINED BEDFELLOWS

Robert Baer: Addicted to Oil : Robert Baer, a former CIA agent and the author of "The Fall of the House of Saud" (May Atlantic), discusses the perils of our dependence on Saudi Arabia and its precious supply of fuel (Elizabeth Shelburne, Atlantic Monthly)

[Q:] In your article you describe how vulnerable the Saudi oil infrastructure is to attack. How worried should we be about the kind of attack that you mention? And can you describe what kind of shape an attack might take?

[A:] Well, here's my theory. Of course, I'm not an expert, I'm not an engineer. I've read stuff on the vulnerabilities of Saudi oil, tightly held studies. And what the engineers worry about is, What could be done if there was a strong support system behind the planners, or if people inside the oil industry were co-opted; what sort of damage could they do? Externally, a truck bomb at the gate would do minimal damage. But, if an employee who knew the system could place explosives, could hit a couple key places, including the redundant systems, then you could take 25 percent of Saudi oil off the market for a long period of time. That's the worst-case scenario.

With respect to the attacks last Monday on the compounds in Riyadh, there is more and more evidence that I am hearing (and it's not confirmed yet) that this was done with internal support from the National Guard. So, if they can do this to the compounds-a military operation with all these suicide bombers and multiple car bombs-why couldn't these same groups hit the oil industry and really do serious damage? I'm quite sure at this point that the Saudis have got security all over that system at the sensitive points. If it were just bin Laden on the outside, the risk isn't that much. But when you have internal support and operatives, then it worries me. [...]

[Q:] Can the American and global dependency on Saudi oil be changed? If so, how do we do it?

[A:] It's got to be changed. Just look at the environmental motivations to change it. And the increase in our dependence on oil can only make matters worse, because oil unfortunately sits in the most unstable parts of the world: Venezuela, Nigeria, Chad, the Middle East, the Caucasus, and Central Asia. Even Russia's not particularly stable. When our future is in the hands of parts of the world that are spinning out of control, it worries me.

[Q:] What would be your first thoughts in terms of how we go about making the change?

[A:] I would start with, for one, taxing carbon-based energy sources. We have a huge gas problem in the United States; I'd start taxing those sources in order to force down consumption. Then I'd use incentives and start investigating practical alternatives-fuel cells, wind energy. Pumping more oil is just not going to do it. Alaska's going to last us for, what, sixty days of oil consumption? I think that's wishful thinking. Once we back away from this dependence on foreign oil or oil at all, we can have a more independent foreign policy.

[Q:] One of the things that you mention in your article is the surplus oil that the Saudis sent to the U.S. after September 11. Was that part of an agreement with the U.S.? Did the Saudis do this of their own volition? How did that decision come about?

[A:] There's an extremely close relationship between the White House and the king of Saudi Arabia, along with the oil minister and the ambassador. You can call the ambassador up and say, "Look, we're forecasting a shortage in the world oil market because of speculation. Can you pump more?" In every crisis, the Saudis have come through. Let's be frank about it-they were our best allies in the Middle East. They banked this oil-2-3 million barrels-at a very high cost, they never got reimbursed for it, and they were always there. The Iran-Iraq war, they were there. When the Iraqis overran Kuwait, they were there. Strikes in Venezuela, they came through and pumped more oil. They had their own interests, but they also protected our markets as well.

[Q:] Were they being financially compensated for pumping more oil?

[A:] We pay market prices. But the point is that it's all based on supply and demand, and by increasing the supply, they keep down the price. It's something the Saudis have paid out of their pockets. We've never reimbursed them for this surplus capacity. We built it in the sixties and seventies; but when they nationalized Aramco they paid for it, they bought it back. We can't simply just sit down and say, "These guys have always been against us and the Wahhabi fundamentalists have been sent by the royal family to destroy the West"-that's when it veers off into right-wing theory.

Unfortunately, The Atlantic has not put Mr. Baer's essay on-line--it's equal parts fascinating & frightening. But this interview captures some of just how complicated our relationship with the Sauds is. Note that in the wake of 9-11, even as there were emotional cries for us to "deal with", even to topple, the kingdom, it was cranking out oil to help us avoid what could have been an economic catastrophe.

On the other point Mr. Baer raises in the snippet above, there are seemingly credible rumors that the Bush administration would like to shift the entire American tax system from taxes on income to taxes on consumption. One would think you could get a lot of Democrats to go for an immediate reform that would raise taxes on "carbon-based energy sources" while offsetting the increases somewhere else in the code. Posted by Orrin Judd at June 1, 2003 3:45 PM