Courtesy Reuters

The Middle East: U.S.-Saudi Relations and the Oil Crises of the 1980s

In the next five to ten years, the industrial world's demand for oil from the Organization of Petroleum Exporting Countries is likely to catch up with the amounts that OPEC countries will be able or willing to make available for export. The leading oil exporter, with more than a fourth of the world total, is Saudi Arabia; the world's largest consumer of oil - and since the lifting of import quotas in the spring of 1973 its leading importer - has been the United States. At what exact point the ascending curves of global demand for oil imports and of available OPEC exports will intersect will therefore depend in large measure on policies adopted by the United States in the next year or two, and by Saudi Arabia in the next five to ten.

The third major variable will be the rate of the industrial world's recovery from its 1973-75 recession, itself partly dependent on American and Saudi policies from year to year. But whenever the demand and supply curves do intersect, or approach their point of intersection, there is serious danger of physical shortages of oil throughout the non-communist world, of a second price jump comparable in amount to that of 1973-74, and of a series of confrontations not only between the United States and Arab oil-exporting countries but also between the United States and its allies in Western Europe and Japan.

Forecasts of future oil supply and demand in industrial countries drawn up under the immediate impact of the 1973 crisis have since been recognized as far too optimistic. Consumers have done little to curtail their use of energy in response to high prices; governments have been laggard in enforcing conservation, and irresolute in promoting the development of alternatives to oil; coal and uranium have risen in price; and the Alaska pipeline, construction of nuclear power stations, and offshore drilling programs have all encountered numerous delays.1 Even the more cautious recent estimates, however, still concentrate chiefly on trends and policies within

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