Defeating oil

by Caroline Glick 
www.jpost.com
May 7, 2004 

To understand what must be done to defeat the forces of Islamic 
fascism, we must understand its strengths and vulnerabilities.
In a word, they are the same: Oil. 

Last Saturday we were given a reminder of this fact in the form 
of a terrorist attack in Saudi Arabia. 

In the Red Sea port city of Yanbu, Saudi Arabia, jihadi gunmen 
opened fire on foreign workers in the offices of the Swiss-based 
ABB Lummus engineering firm in the city. In all, the four 
terrorists, all Saudis, killed two Americans, two Britons, one 
Australian and one Saudi national. 

The attack was distinctive because of its target. Yanbu, as the 
western endpoint of Saudi Arabia's east-west oil pipeline, is one 
of the backbones of Saudi Arabia's oil industry. Some nine hundred 
thousand barrels of oil are pumped to Yanbu daily. 

Saudi Arabia's daily oil production of 8 million barrels constitutes 
ten percent of the world's total daily output. But that is not what 
makes Saudi Arabia so important. Saudi Arabia's oil is crucial to 
the global economy because it is the only country in the world 
that can easily ratchet up its production in a significant way - 
to as much as 10.5 million barrels per day. When oil workers go on 
strike in Venezuela, or when terrorists attack New York and 
Washington, the Saudis raise their supply and thus act as the 
shock absorbers of the global economy. Add to that the fact that 
Saudi Arabia has 25% of the world's proven petroleum reserves and 
the point becomes clear: An attack on Saudi Arabia's oil 
infrastructures is an attack on the global economy. 

And indeed, the point was well taken. By mid-week, the price of 
crude oil futures for next month had surged to a 14 year high at 
just shy of $40 per barrel. 

And this is nothing. The Yanbu attack did not actually cause any 
damage to the pipeline or the Yanbu port. It merely sent a message. 
Saudi Arabia's oil is devastatingly vulnerable to strategic 
attack. The kingdom exports most of its oil through two main 
terminals, Ras Tanura and Al Jubayl on the Persian Gulf side of 
the kingdom. 

A major attack on one of the terminals could cripple global oil 
markets for months, sending the world into an economic depression 
more devastating than that of the 1930s. As The Wall Street 
Journal reported Wednesday, an attack that causes Saudi output 
to drop just 2.5 million barrels per day would raise the price 
of oil to $100 per barrel. 

Wednesday, Pakistan announced that it had uncovered a plot to 
hijack a plane in Pakistan and fly it into a structure in the UAE. 
A plane crash into Ras Tanura, according to Dr. Gal Luft, the 
executive director of the Washington based Institute for the 
Analysis of Global Security, "could take 3 to 4 million barrels 
off the market overnight." 

As one oil analyst told the paper, an attack on Saudi oil supplies 
is "one event to which no one has an answer." 

The attack at Yanbu would not be particularly troubling if it 
could be seen as an isolated event. Yet, since the September 11, 
2001 attacks in the US, there has been a string of attacks and 
attempted attacks on the oil economy in Sri Lanka, Saudi Arabia 
and Yemen. Over the past year of US-led occupation of Iraq, 
Iraqi oil infrastructures have been sabotaged no less than 
100 times. 

These attacks have severely degraded Iraq's daily production 
capacity from its pre-war average of 2.5 million barrels. 
If last week's coordinated seaborne attack on the Basra oil 
terminal in southern Iraq had been successful, the Iraqi oil 
economy would have been crippled and the reverberations of the 
attack would have been felt worldwide. 

Osama bin Laden himself has explained that Al Qaida seeks to 
destroy the US by destroying the oil economy. According to Luft, 
"It is absolutely clear that we are looking at a growing 
phenomenon of terrorist attacks launched directly against oil 
infrastructures with the aim of destroying the international 
economy." Aside from the specter of a strategic attack on Saudi 
oil, the oil economy suffers from an additional structural 
weakness. Global demand for oil is rising steeply each year as 
India and China rapidly develop. Yet supply is not rising to 
meet this demand. According to Luft, "Growth in demand is 
outstripping exploration and recovery at a rate of 3-4 to 1." 

More discouraging still is the fact that over the next 10 to 20 
years proven reserves will become increasingly concentrated in 
the hands of Arab and Islamic producers. Whereas today 66 percent 
of the world's proven oil reserves are controlled by Middle 
Eastern regimes, at current production levels, by 2020, those 
regimes will control 83 percent of the world's petroleum. 

And conquest of these lands to secure stable oil supplies 
does not provide an answer. As Luft notes, "The Iraqi case makes 
clear that it is one thing to conquer the oilfields. It is 
another thing completely to secure supplies from sabotage. 
The US has not been able to do that in Iraq and there is no reason 
to believe that it will have an easier time anywhere else." 

The problem we are facing in our war against Islamic terrorism, 
not only in Israel but throughout the non-Islamic world is that 
we are fighting an enemy that we are economically dependent on. 
Saudi Arabia and Iran are the financial and ideological engines 
of the global jihad. 

Yet, the structural flaws in the oil based economy - insufficient 
long-term supply, vulnerability to sabotage and concentration of 
resources in the hands Middle Eastern rogue states - point to the 
inherent weakness of these regimes: they are wholly dependent on 
their oil revenues. In Saudi Arabia, oil revenues make up 90-95% 
of total export earnings while oil and gas constitute 85% of 
Iran's total exports. 

In the coming years, as demand outstrips supply, two things can 
happen. The global economy can be seriously damaged, or the major 
consumers of oil will seek alternative sources of energy to fuel 
their cars and airplanes. If the latter transpires, Saudi Arabia 
and Iran will cease to be capable of financing their holy war 
on the non-Islamic world and the war will end. 

But how long will it take to find fuel sources capable of 
replacing oil? 

The Institute for the Analysis of Global Security's work has 
shown that the way to diminish, with an eye towards ending 
global dependence on Middle Eastern oil is already at our 
fingertips. The technologies for developing and using alternative 
sources of transportation fuel already exists. Getting them on 
tap is largely a matter of public investment and private demand. 
Among the rewards is victory in the terror war by ending our 
enemies' ability to sponsor it. 

In the short run, hybrid cars already exist and some three 
million cars that combine electric batteries with gasoline 
engines are already on the road in America. These "plug-in" 
cars can run on batteries for some 100 km before being recharged. 
Once the battery empties, the car immediately shifts to regular 
gasoline. Alternatively, the battery can be recharged by plugging 
the car into a 120-volt outlet for the night. 

In the medium and long term, gasoline at the pump can be replaced 
by coal, biomass or natural gas-based methanol and corn or 
sugar-based ethanol. According to Luft, both fuels can be 
integrated into already existing transportation infrastructures 
and can run on internal combustion engines. An added benefit is 
that neither fuel emits carbon dioxide. Indeed, some four million 
cars already on the roads in the US are capable of running on 
ethanol and methanol as well as gasoline. 

For an auto manufacturer, building engines that can run on these 
fuels involves an investment of a mere $100 per car. Methanol can 
currently be produced at 50 cents per gallon. For the US, which 
holds a quarter of the world's known coal reserves, as well as 
for China, which also has abundant domestic coal resources, 
moving to methanol transportation fuel could, according to Luft, 
reduce US demand for oil by half in the next 10 to 15 years. 
US power plants are already using clean technologies to convert 
coal into methanol. 

Luft explains that all of these options are preferable to the 
hydrogen fuel cell technologies that have been touted from time 
to time in the past few years because "It will take 40-50 years 
for the technology to become viable and we don't have that kind 
of time." 

For Israel, the need to develop alternate fuels should be a 
national priority and it is not beyond our grasp. Israeli 
scientists have made significant inroads in solar and wind 
energy, but have devoted less energy to synthetic fuels such 
as ethanol and methanol. With Israel's increased economic 
cooperation with India, which has a large domestic auto 
industry and a domestic demand for cars rising by over 50 percent 
per year, there is room for Israeli cooperative efforts with 
Indian car manufacturers to build electric hybrids and alcohol 
fuel friendly internal combustion engines. 

Our tiny landmass, coupled with our high population concentration 
in the coastal plain makes Israel a perfect place to test out 
plug-in hybrid cars. It would both reduce pollution and act as 
a catalyst for demand overseas. 

If the US economy were to suffer from an oil shock as a result 
of a debilitating attack on the Saudi oil supplies, the cost for 
the US of supporting Israel could well become prohibitive for 
American politicians sensitive to their public's demand for 
cheaper fuel. As Luft points out, during the oil shock of 1973, 
bumper stickers began appearing on US highways declaring, 
"We want oil, not Israel." 

On the other hand, if Israel can outlast the oil economy, 
a new world, no longer fearful of Arab oil wrath will open up 
to us. The possibilities then would be limitless and the 
chances for true and lasting peace will no doubt be great and 
real.