Our dependence on petrol leaves despotic Saudi monarchy high and dry

Did you hear it? The clamour from Western governments for democracy in Saudi Arabia? The howls of outrage from the White House and Downing Street about the shootings last Thursday, the suppression of protest last Friday, the arrival of Saudi troops in Bahrain on Monday? No? Nor did I.

Did we miss it, or do they believe that change is less necessary in Saudi Arabia than it is in Libya? If so, on what grounds? The democracy index published by the Economist Intelligence Unit places Libya 158th out of 167 and Saudi Arabia 160th. At least in Libya, for all the cruelties of that regime, women are not officially treated as lepers were in medieval Europe.

Last week, while explaining why protest in the kingdom is unnecessary, Foreign Minister Prince Saud al-Faisal charmingly promised to “cut off the fingers of those who try to interfere in our internal matters”.

In other parts of the world this threat would have been figurative, but he probably meant it. If mass protest has not yet materialised in Saudi Arabia it’s because the monarchy maintains a regime of terror, enforced with the help of torture, mutilation and execution.

Yet Western leaders are even more at ease among the Saudi autocracy than they were in the court of Colonel Muammar Gaddafi. The number of export licences granted by the British government for arms sales to the kingdom has risen roughly fourfold since 2003. The last government was so determined to preserve its special relationship with the Saudi despots that it derailed British justice by forcing the Serious Fraud Office to drop its inquiry into corruption in the al-Yamamah deals.

Why? Future weapons sales doubtless play a role. But there’s an even stronger imperative. A short time ago French bank Société Générale warned that unrest in Saudi Arabia could push the oil price to $200 a barrel.

‘Swing producer’
Abdullah’s kingdom is the world’s last “swing producer” — the only nation capable of raising crude-oil production if it falls elsewhere, or if demand outstrips supply. As a result, political disruption there is as threatening to the stability of Western governments as it is to the Saudi regime. Probably more so, because Western leaders wouldn’t get away with gunning us down in the street.

Few governments of nominal democracies are likely to survive the economic dislocation that a sustained oil price of $200 would deliver: they would be out on their butts quicker than you could cycle past a petrol station. You’re as likely to hear David Cameron call for the overthrow of the House of Saud as you are to hear King Abdullah call for the overthrow of the House of Lords. But even if the regime remains unchallenged it’s not clear that it can keep delivering.

The WikiLeaks cables showed American diplomats questioning the kingdom’s ability to keep raising production. One cable suggested that its reserves have been overstated by 40%. If so, that wouldn’t be surprising. The production quotas assigned to Opec states are a function of the size of their stated reserves: all members of the cartel have an incentive to exaggerate them. Saudi Arabia posts the same figure as it did in 1988. Fact or fiction, who knows? The true condition of its oil fields is a state secret.

Another cable questioned the Saudi ability to keep moving the market. “Clearly they can drive prices up, but we question whether they any longer have the power to drive prices down for a prolonged period.” Western governments rely for their production forecasts primarily on the International Energy Agency (IEA). It has recently had to retreat on both its forecasts of future supply and its mocking dismissal of those who have warned that global oil output may one day peak.

In 2006 the IEA predicted that world oil supply would rise from 82-million barrels a day to 116-million in 2030. In 2008 it reduced the forecast to 106-million, in 2009 to 105-million and in 2010 to 96-million (by 2035).

It might have to be downgraded again. The IEA’s new prediction relies on an assumption that Saudi output will rise from nine million barrels to 14,6-million in 2035. The embassy cables report the alleged opinions of Sadad al-Husseini, the former head of exploration and production at Saudi Aramco: “Sustaining 12-million barrels [per] day output will be possible only for a limited period of time and even then, only with a massive investment programme.”

Detailed figures
Once Saudi Arabia has produced 180-billion barrels (in about 2021) “a slow but steady output decline will ensue and no amount of effort will be able to stop it”. When the United States embassy cables were released, al-Husseini denied that he had said this. But the figures in the report are detailed and precise.

Unlike the last British government, the present coalition does at least admit there might be a problem. Chris Huhne, the energy minister, argues that “getting off the oil hook is made all the more urgent by the crisis in the Middle East. We cannot afford to go on relying on such a volatile source of energy”. Partly to this end, he has published a new carbon plan.

Some of the commitments, particularly on electricity and home-heating, are better than might have been expected. But the plan’s weakest point is transport, where it offers incentives without regulation. Huhne’s response to the oil crisis will save plenty of coal and gas, but precious little oil. There is as yet no government programme that will sharply reduce our craving for oil.

Oil dependency means dependency on Saudi Arabia. Dependency on Saudi Arabia means empowerment of its despotic monarchy. Forget, if you must, the trifling issue of climate breakdown. Forget the incidental matter of economic depression. An oil-dependent economy means an impregnable tyranny in Saudi Arabia. That alone should prompt us to rethink the way we travel. — Guardian News & Media 2011

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