Cheaper oil and shifting sands

The price of regular gas in the Washington suburbs was $2.74 a gallon when I filled my car this week and it could fall farther as the price of crude oil hit $69, two thirds of what it was in June.
December 2, 2014

The price of regular gas in the Washington suburbs was $2.74 a gallon when I filled my car this week and it could fall farther as the price of crude oil hit $69, two thirds of what it was in June.  OPEC is weakening and the United States is poised to surpass Saudi Arabia by next summer as the world's number one oil producer. That's good news for consumers and for those who feel OPEC has exerted undue influence on American foreign policy for too long.

The oil cartel, led by Saudi Arabia, imposed an oil embargo a few days after Egypt and Syria attacked Israel on Yom Kippur in 1973.  Their purpose was to punish the United States and other countries for supporting Israel and to try to force them to change their Mideast policies. Since then the mantra of every American president has been energy independence, particularly ending our reliance on Middle Eastern oil. 

“That elusive goal may finally have arrived, at least for the foreseeable future,” the New York Times reported.  Saudi Arabia and its 11 oil producing OPEC partners have been unable to agree to a production cut that would halt the drop in crude oil prices.  The cartel is “no longer the dominating producer whose decisions determine global supplies and prices,” wrote Clifford Krauss. 

For the Saudis and their partners oil was a potent political instrument.  During the Yom Kippur war and in the coming years they wielded their oil weapon to try to force the Americans, Europeans and others to adopt more pro-Arab policies.

They were not without some success. In Canada, the Netherlands, Britain, France and particularly Japan, governments began to distance themselves from Israel. Even the Nixon administration agreed to pressure Israel to withdraw from parts of the Sinai, the Suez Canal and the Golan Heights.

But public opinion in the United States remained steadfastly pro-Israel.  During the oil embargo polls showed sympathies were with Israel by a 6:1 ratio. A contributing factor was a conviction that the Arabs, not the Israelis, were responsible for making American motorists wait in long lines on alternating days to fuel up their gas guzzlers at ever-rising prices.

In the eyes of the American public the culprits who have kept oil prices up for so long have been the greedy, high-spending Arabs and their co-conspirators in the oil industry, which many suspected manipulating the markets and gouging consumers in the interest of obscene profits. 

Besides the oil companies' shareholders, those who benefitted most from high oil prices have been the Pentagon and its partners in the defense industry.

American consumers have been fueling an arms race in the Gulf, with their government's strong encouragement.  Since the Kissinger era it has been an American policy to recycle petrodollars by persuading the oil sheikhs to buy top-of-the-line U.S. weapons and defense systems. Those rich customers became the Pentagon's favorite cash cow, buying last year's model of some weapons at this year's prices so the uniformed services could upgrade their inventories at reduced cost. It also produced economies of scale; the more F-15s and AWACSs early warning aircraft that could be sold to the Saudis the lower the unit price for the U.S. Air Force' own purchases.  Those Arab arsenals also created a dependence on American training, maintenance and spare parts that has been financially lucrative and politically priceless. 

When Israel's friends questioned some of these sales to countries at war with the Jewish state, the State Department was ready with boilerplate letters assuring the Congress that nothing the Pentagon was peddling would change the balance of power in the Middle East.

American public opinion has consistently and convincingly favored Israel as a reliable ally with shared values and common enemies. That was driven home on September 11, 2011, when 15 of the 19 terrorists who attacked that day were Saudis.

They won't say it publicly but the Saudis and some of their neighbors see Israel as more of an ally than an enemy in many respects.  They share a concern over Iran's nuclear ambitions and Russian influence in the region, notably in its support for the Assad regime in Syria and its protection of Iran at the United Nations.  OPEC's lower prices also help the United States and Israel by intensifying pressure on Iran and Russia, whose economies are faltering in the face of American-led international sanctions. The Saudis don't want to see Iran gain full production and market access.

Israel and several Gulf states have been doing business very quietly for years but more recently there are reports that some of them, including the Saudis, and Israelis have been sharing intelligence and common concerns about Iran and the growing influence of the Muslim Brotherhood, the Islamic State and Islamist extremists.  Along with that is a shared concern about what they consider the Obama administration's inept foreign policy team.

But don't look for anything to happen on Benjamin Netanyahu's vision of an Israeli alliance with the secular, moderate Arab states regardless of their common interests.  Nothing can or will happen so long as the Israeli-Palestinian dispute remains unresolved and as long as Netanyahu pokes a finger in the eye of world opinion by expanding settlements, notwithstanding the Israeli prime minister's suggestion in his UN speech this fall that such an alliance would facilitate peace with the Palestinians.

That is the reverse of the Arab view: peace is a prerequisite to rapprochement.  They see Netanyahu's proposal as a diversion.  The idea has considerable merit but the messenger is flawed.  Like his Palestinian counterpart, Mahmoud Abbas, he has failed to make a convincing case that he is serious about achieving peace and prepared to make the historic decisions that would require.  The Israeli-Arab alliance will have to wait until there are new leaders in Jerusalem and Ramallah.

The new reality in the Middle East – the threat of radical Islam, nuclear Iran, a weakened of OPEC and American energy independence – creates new opportunities for American and Israeli diplomacy.  Unfortunately, the current leadership in Jerusalem seems more intent on playing local politics at the expense of Israel's long-term international interests.

©2014 Douglas M. Bloomfield


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