"Muslims are starving to death and the United States is stealing their oil,"

Bin Laden, the U.S. and Mideast Petroleum

by Elmer Swenson


Muslims are starving to death and the United States is stealing their oil. Since 1973, the price of petrol has increased only $8/barrel while the prices of other items have gone up three times. The oil prices should also have gone up three times but this did not happen. - Osama bin Laden, 18 March 1997 [1]
You steal our wealth and oil at paltry prices because of your international influence and military threats. This theft is indeed the biggest theft ever witnessed by mankind in the history of the world. ... If people steal our wealth, then we have the right to destroy their economy. - Osama bin Laden, Oct. 6, 2002 [1a]

In his famous 1998 fatwa calling on all good Muslims to "kill the Americans and plunder their possessions," bin Laden lists three "crimes and sins" of America: Support for Israel, sanctions on Iraq, and U.S. "occupation" of the Arabian Peninsula - including the "plundering" of Arabian riches. [2]
If the first three (aid, sanctions and military bases) were obvious, the "plundering" was less so. Wasn't the U.S. paying for the oil it took from Saudi Arabia? Yes, but not enough. In the same pre-fatwa interview quoted above, bin Laden told his questioner that Arab nations had lost "more than $1100 billion" because the United States had kept the price of petroleum artificially low (the price at the time bin Laden spoke was about $20/barrel). "We must get this money back from the United States." [3]

The issue might seem less relevant now that oil is back up above $60/barrel [3?] and bin Laden is on the run (before his Jan. 2006 message he hadn't been heard from in over a year). But of course bin Laden didn't just say he wanted prices back up; he also wants the "stolen" $1100 billion "back" from the U.S. And if he's incinerated by a missile there's always al Qaeda's number two and "intellectual and ideological driving force," Ayman al-Zawahiri, or other followers sharing the amir's belief. [3a]

So is there anything to his complaint? Was (or is) the U.S. (and other Western importers) somehow, some way depriving Saudi and other Arabs/Muslims of huge sums (if not $1 trillion) by keeping prices that importers pay lower than they ought rightfully to be? And if not, why are Muslims "starving" (or at least not doing so well)?

* * * * * * * * * * * * * * * * *

It is true that:

  1. Saudi income has fallen precipitously. Saudi Arabia has the biggest and some of the most profitable oil fields in the world, and not that many people to split up the proceeds among. With 262 billion barrels of proven reserves and a population of only about 26 million, the people of bin Laden's native land would seem destined for a life of comfort and ease. But it hasn't been so smooth. When bin Laden made his fatwa, average Saudi income had just undergone a 10-year drop from $15,000/year to $4000! Saudis who had been used to traveling to smaller Gulf States to party and shop were forced to try and find work there. And when Saudis and other Gulf states suffer, the surrounding poorer Arab (and to a lesser extent non-Arab Muslim) countries suffer from the loss of jobs and charity funds. Income now is back up but nowhere near its peak (when adjusted for inflation). [4]

  2. Its income has dropped as petrol prices have dropped. At the oil price peak (1981), Saudi per capita income was much higher than America's. At the oil bottom (under $10 per barrel in 1998) [5], it hit its $4000 nadir.

  3. The Saudi government gives breaks to the U.S. In recent decades there has been a real if unwritten quid pro quo of U.S. military protection of Saudi Arabia in exchange for Saudi favors. Saudis have paid for US military protection ($55 billion for the Gulf War), made a point of buying US products at full price, [6] and even given US buyers a discount (about $1 a barrel) on Saudi oil. [7] Not only that, they've often used spare petroleum capacity to prevent shortages on the world market (though they couldn't do it for this latest spike) [8], stabilizing and sometimes even driving down prices. In the Arab oil exporting world, more nationalistic groups -- such as the old Arab Ba’ath Socialist Party -- want oil reserves conserved and oil prices higher, but Saudi Arabia supports a "moderate pricing policy."

  4. Once upon a time, the reverse was true for each of these facts. 30 years ago, Saudi Arabia cut off the U.S., and prices and income went through the roof. The Saudis provided the economic muscle behind the Arab oil embargo of pro-Israeli states during the Ramadan War (aka Yom Kippur war) in 1973. Arab exporters cut production by 5 million barrels a day. By the time the US finally got a cease-fire agreement (March 1974), crude oil was 4X the price of a year before. [9]

* * * * * * * * * * * * * * * * *

But beyond this bin Laden's conspiracy theory (US military muscle equals high production equals low prices equals stolen income) falls apart.

  1. Start with petroleum prices. Where is it written that the price of any commodity or product "should" keep pace with inflation, and not bounce around according to the dictates of recessions and booms, competition from other suppliers and alternatives, advances in technology, or even weather? [9] The staple of information technology, microprocessors, is famous for falling in price. Calculations per second having fallen exponentially for decades (following Moore's Law). Humanity has benefited, the chip industry boomed. http://en.wikipedia.org/wiki/Moore's_law

    Food staple commodities have not, but neither have they followed the inflation rate. Bin Laden claims American wheat has "increased threefold" over "the last 24 years," when in fact it's done worse for its producers than oil. Check the price history graph in the Commodity Research Bureau's Yearbook and you'll see that it was almost exactly 24 years before bin Laden's interview that the price of American wheat peaked (at $6.50/bushel around early 1974). Since then it's never gotten above $5.60, fluctuating between 1/3 and 2/3 of its peak price . [10]

    And when bin Laden talks about the tripling in oil price that "should" have happened, he means a rise on top of the Ramadan War tripling in price. What he doesn't say is that's exactly what happened -- oil hit $35/barrel in 1981 ... it's just that it didn't stay there long. http://www.wtrg.com/oil_graphs/oilprice1947.gif

    Homes got more insulation, cars got smaller. The oil industry explored for more oil, bought new equipment, invested in new technology. All the other industries invested in energy efficiency and alternative sources. By the beginning of this decade, economic growth sucked up less energy (how much petroleum do computers use?), used less oil for what energy it did need (down from 49% to 40%), and got less of that oil from the Middle East than before (down from 37% to 27%). [11]

    In effect the embargo was not the bold appropriation of wealth it looked like at the time. When something goes up in price by ten times, people buy less of it. The Saudi's share of world oil production fell from 16% in 1980 to 6% by 1985 [11a]. It was to stop this loss of revenue -- not fealty to kuffar masters in America -- that forced them to pump more oil and lower prices.

  2. Even if oil had kept up with inflation, Saudi per capita income would not have. Why? Following conservative interpretations of Islam to eschew birth control, the Saudi and Gulf state population has exploded -- going from 24 million to 116 million in the last 50 years.[12] The same oil earnings that gives $20,000/year per person to a population of 10 million people leaves only $8000/year when there are 25 million to share it with. [13]

  3. It's a lot easier to withhold oil and force up prices when you have plenty of production to spare. When your earnings are all going to satisfy your own citizens' demand for the good life and you have to compete with other producers, cutting output is problematic. As recently as four years ago, OPEC had trouble keeping prices from falling even when it cut production. Russia (which isn't a member of OPEC) filled the gap in supply. (In 2000-2001 Russia added 1 million barrels of oil a day to the world market.) [14]

    In fact, if there's one oil exporter (or one oil producing region) in the world with a vested interest in a "moderate pricing policy" to avoid losing customers, it's Saudi Arabia (and the rest of the Persian Gulf). The Gulf's vast reserves (2/3 of the proven world reserves) will last long after other countries are drained, and with their rock bottom production costs ($2 a barrel compared to $10 average in the U.S. or $11 in the North Sea), Persian Gulf producers can undercut any competing supplier. [15]

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~

All this is not to say that there's nothing wrong with the Saudi government or with U.S. policy there. Young Saudis go without jobs while billions are spent on palaces for princes, contracts for Boeing planes and other expensive goods from US/Western contractors. [16]

But how much of this waste qualifies as "plunder" rather than Saudi corruption beyond American control is open to question.

Payments to the U.S. has bought much more than palaces and overpriced infrastructure. Some of the services rendered include turning a blind eye to wildly unequal policies such as:

  • "Visa Express" service. Until very recently (and unlike citizens of most other countries), Saudis could get a visa to America without having to apply in person (something of good use to the 15 of 19 9/11 hijackers that came from Saudi Arabia).

    Americans were allowed into Saudi Arabia by invitation only. [17]

  • Saudi school books. Until very recently, Saudi school children were taught that "it is compulsory for the Muslims to ... consider the infidels their enemy." [18].

    American schoolbooks celebrated diversity.

  • Freedom of religion. In Saudi Arabia churches and other non-Muslim places of worship are not only illegal (as are bibles, crosses and other non-Muslim religious symbols), but even private worship services may be busted and their participants imprisoned.

    In America, until very recently the Saudi Embassy's large, well-funded Department of Islamic Affairs facilitated million of dollars in mosque-building, proselytizing, and distribution of Wahhabi pamphlets and books preaching the same doctrine as their schoolbooks (and worse), for example: Muslims should not only "always oppose" infidels "in every way," but "to hate them for their religion ... for Allah's sake," that democracy "is responsible for all the horrible wars" of the 20th century," etc. [19] The department was finally shut down in late 2003.

  • And most infamously: "prominent Saudi donors, companies and charities" contributed between $300 to $500 million to al-Qaeda itself over the last 10 years.

    America spends $30-$60 billion a year to protect Saudi Arabia and the other Gulf states and their oil supply. [20]
  • While these activities certainly didn't and don't help the unemployed and otherwise economically distressed non-elite Saudis, bin Laden (a Wahhabi as well as a terrorist) would be hard pressed to disapprove of them ... or explain how a country "dictating to the Arabs at gunpoint" would tolerate them.[21]

    Finally, it's less than obvious that US troops are in the Persian Gulf (or even on Saudi soil) is proof of occupation and puppet status of host governments. The gulf is home to small or sparsely populated countries with valuable oil fields. Saddam's Iraq has invaded two neighbors (Iran and Kuwait) and made threatening noises to another (Syria). Another big player, the Islamic Republic of Iran has also professed extraterritorial desires.
    http://gemsofislamism.tripod.com/khomeini_promises_kept.html#Victory
    http://gemsofislamism.tripod.com/islamo-fascism.html#footnote_5
    Military protection to ensure a steady supply of oil means a steady source of revenue for the exporters. That hardly clashes with the interests of Muslim exporters!

    o o o o o o o o o o o o o o o o o o

    Comments:

    In some ways bin Laden's fixation ("We must get this money back from the United States") is as spooky as his September 11 attack. His goal of "recovering" $1100 billion, or taking vengance for its "theft", is not only greedy and unreasonable, it has literally no basis in reality.

    The radical contrast of Al Qaeda's means and ends - using the most advanced technology in the pursuit of a return to medieval society - has oft been commented on. But this split personality seems to extend to thought process no less than equipment.

    When it comes to planning and preparing the murder of thousands of civilians, the Jihadists embrace reality and the task of problem solving. "What is our objective? What obstacles are we faced with? How do we get around airline security? Where did we go wrong in our last operation? What plane flights will have the most destructive impact?" If Jack Welch or Rupert Murdoch were mass murderers rather than CEOs they would be hard pressed to do better.

    But when it comes to WHY they want to kill, the adult brain seems to turn off and out comes a spoiled six year old: "We used to have lots of money. Now we don't. I want lots of money. Somebody must be stealing my money. Pay me more money or I'll kill you."

    If only this "mind" could be "unified" the world would be safer.


    NOTES

    [1] (bin Laden in an interview with Hamid Mir, Pakistan, 18 March 1997. Quoted on p.230 of The New Jackals : Ramzi Yousef, Osama Bin Laden and the Future of Terrorism by Simon Reeve, 1999.

    Muslims are starving to death and the United States is stealing their oil. Since 1973, the price of petrol has increased only $8/barrel while the prices of other items have gone up three times. The oil prices should also have gone up three times but this did not happen.` According to bin Laden the price of American wheat has increased threefold but the price of Arab oil has increased by no more than a few dollars over a period of 24 years - `because the United States is dictating to the Arabs at gunpoint.` Bin Laden claims that over the last 13 years the United States has caused Arab nations a loss of more than $1100 billion. `We must get this money back from the United States.`

    It's not 100% clear what $8/barrel increase bin Laden is referring to. In the late 1990s oil prices went from over $20/barrel (Jan. 1997) to below $10 (Dec. 1998) to back up past $20 by the end of the year.
    http://www.wtrg.com/oil_graphs/crudeoilprice97_03.gif
    But in theory he could have meant an increase from $3 (in 1973) to $11/barrel (sometime around 1999). I'm assuming he meant from $12/barrel (though that price may be more an early 1974 price than a 1973 one) to $20/barrel (the price a month before bin Laden gave his interview and roughly the average price for the 1990s).

    [1a]

    You steal our wealth and oil at paltry prices because of your international influence and military threats. This theft is indeed the biggest theft ever witnessed by mankind in the history of the world." [p.163] ... If people steal our wealth, then we have the right to destroy their economy." [p.165]
    From Messages to the World, The Statements of Osama Bin Laden, Edited and Introduced by Bruce Lawrence, Translated by James Howarth, Verso, 2005. Quoting Oct. 6, 2002 message by bin Laden. Appeared in Al-Qala'a website and then the London Observer Nov. 24, 2002.

    See also another bin Laden message dated Dec. 16, 2004 addressing "the fate of Saudi Arabia," that was "posted on the website of the Global Islamic Media Front and circulated widely in English translation." Quoted in p.272, Messages to the World, ... 2006

    Remember ... that the biggest reason for our enemies' control over our lands is to steal our oil, so give everything you can to stop the greatest theft of oil in history from the current and future generations in collusion with the agents and foreigners. They are taking this oil for a paltry price in the knowledge that the prices of all commodities have multiplied many times. But oil, which is the basis of all industry, has gone down in price many times.

    [2] from "the fatwa against the crusaders" (a fatwa being a legal opinion concerning Islamic Law -- in this case the opinion being that Muslims should "kill the Americans [and their allies] and plunder their money wherever and whenever they find it.")

    ... First, for over seven years the United States has been occupying the lands of Islam in the holiest of places, the Arabian Peninsula, plundering its riches ...
    World Islamic Front Statement 23 February 1998 Al-Quds al-Arabi
    http://www.fas.org/irp/world/para/docs/980223-fatwa.htm

    [3] To repeat the quote from footnote 1:

    ... According to bin Laden the price of American wheat has increased threefold but the price of Arab oil has increased by no more than a few dollars over a period of 24 years - because the United States is dictating to the Arabs at gunpoint.` Bin Laden claims that over the last 13 years the United States has caused Arab nations a loss of more than $1100 billion. `We must get this money back from the United States.
    ` (bin Laden interview with Hamid Mir, Pakistan, 18 March 1997) quoted on p.230 of The New Jackals : Ramzi Yousef, Osama Bin Laden and the Future of Terrorism by Simon Reeve, 1999.

    [3?] Is $50-$60+/barrel oil here to stay?

    Some say it's temporary ....

    .... it is the memory of $10 oil, not physical limits, that is holding [producers] back. And constantly improving technology is not only raising yields in oilfields everywhere, but also opening up new sources of oil.

    (from: "OPEC's symbolic move," Economist.com / Global Agenda. London: Jun 20, 2005. pg. 1)


    Some say the days of cheap oil are over.

    Chinese oil demand has doubled over the last 10 years, making it today the world's second biggest oil consumer after the US.... Chinese oil consumption (which rose 17 per cent last year alone) is now expected to double again over the next 15 years.

    (from "THE END OF CHEAP OIL," by Dan Box. The Ecologist. Sturminster Newton: Oct 2005. V.35, Iss. 8; pg. 36, 9 pgs)

    There is still crude oil left underground but

    much of this difficult oil is simply not economical to produce, and it won't become economical unless oil prices rise significantly. Barring that outcome, analysts believe that non-OPEC oil production will fall each year by as much as a million barrels a day. With world oil demand expected to increase each year by nearly two million barrels a day, the global oil industry must somehow add another three million barrels of oil daily just to keep markets happy.

    (from: The End of Oil : On the Edge of a Perilous New World by Paul Roberts, Boston : Houghton Mifflin, 2004, p.251)


    [3a]

    ... While bin Laden himself hasn't been heard from since October 2004, last week's videotape was the fifth message from al-Zawahiri released over the past year, including several claiming responsibility for the July attacks on London's transit system.
    Considered the intellectual and ideological driving force behind al Qaeda, al-Zawahiri has been associated with bin Laden since at least 1987 ...

    From: "Airstrike may have killed bin Laden's No. 2" (It didn't) by From David Ensor CNN, January 14, 2006;
    http://www.cnn.com/2006/WORLD/meast/01/13/alqaeda.strike/

    Bin Laden is not alone in his belief that the US has unjust control of Muslim oil. A google search of the words: aljazeera america control muslim oil, (circa 1-10-2006) yields 795,000 hits.


    [4] POPULATION and INCOME stats

    GDP per head in Saudi Arabia is rumoured to have fallen from $15,000 per year a decade ago to as low as $4000 in 1998; unemployment and discontent is growing among the population, and the regime shows signs of weakness. Vast petroleum revenues that used to earn the nation more than $140 billion a year during the 1980s have now dwindled to just $20 billion a year, according to Western intelligence reports. (source being a intelligence official interviewed by author) Saudis who used to travel to smaller Gulf states to party and shop are now being forced into taking employment there, while some are even taking jobs as menial workers - almost unheard of for Saudi citizens. The Saudi government has been forced to announce that at least 80% of every company workforce must be Saudi citizens in a desperate bid to increase employment among its supporters inside the kingdom.
    (from: The New Jackals : Ramzi Yousef, Osama Bin Laden and the Future of Terrorism. By Simon Reeve, 1999. p.230))

    see also:

    Since 1980 Saudi Arabia's population has exploded from 7 million to 19 million, thanks to one of the highest birth rates in the world and zero family planning. Meanwhile, per-capita oil income has fallen from $19,000, at the height of the oil boom in 1981, to about $7,300 today. With less money trickling down to sustain extended families or bloated government offices, several million Saudis are now unemployed, underemployed or taking jobs they never would have before.

    (from: New York Times February 20, 2002 "The Saudi Challenge" By THOMAS L. FRIEDMAN

    Recent Price rebound:
    Unemployment is somewhere between 13% and 20%, but "King Abdallah has announced that the salaries of all civilian employees, military personnel, and retirees will be increased by 15%, effective the coming month of Ramadan (October)," which may well use up resources needed to create jobs creation.
    from: "Press Corner, The `Super Spike` in Oil Prices - Implications for the U.S. and Saudi Arabia," By Dr. Nimrod Raphaeli
    http://www.freemuslims.org/news/article.php?article=863 August 24, 2005


    [5]

    ... From a peak of $227 billion in 1981, Saudi oil income fell below $60 billion a year in the '90s to as low as $35 billion in 1998 (all these are expressed in constant, 2000 dollars). ...

    "Marriage of Convenience: The U.S.-Saudi Alliance ..." by Robert G. Kaiser and David Ottaway
    Washington Post, February 11, 2002; Page A01
    from: http://www.washingtonpost.com/wp-dyn/articles/A55265-2002Feb10.html

    Per capita income for Saudi in 1981 would be $227 billion/9 million people = approx. $25,000
    compared to $2,632 billion/227 million people for the US in 1980 = $11,620
    (Saudi calculation uses only oil income for national domestic product. 8 million population figure comes from New York Times February 20, 2002, quoted above with one million added on to the 1980 figure (Saudi isn't big on statistics or censuses). Source for US numbers is World Almanac 1985.)


    Price collapse to under $10 per barrel occurred in December 1998.
    http://www.freemuslims.org/news/article.php?article=863


    [6] SAUDI FAVORS

    Amongst the things Saudi's bought from the US were

    ... $100 billion on American weapons, construction, spare parts and support, and for years have ranked first in the world as a customer for American arms makers. They bought F-5 and F-16 fighter jets, AWACs observation aircraft, Abrams M-1 tanks, Bradley armored vehicles, naval vessels ...

    In addition

    ... In 1985, Fahd gave $1 million to first lady Nancy Reagan's "Just Say No" anti-drug program. In 1989, the king gave another million to first lady Barbara Bush's campaign against illiteracy. ...
    $30 million for the Contras at the request of Ronald Reagan.

    "Marriage of Convenience: The U.S.-Saudi Alliance Oil for Security Fueled Close Ties But Major Differences Led to Tensions"
    By Robert G. Kaiser and David Ottaway Washington Post February 11, 2002; Page A01


    [7] Saudis have ..... even given US buyers a discount (about $1 a barrel) on Saudi oil.

    ...Indeed, if oil trading were left to market forces, the kingdom's oil exports to the United States would fall by half. Instead, Saudi Arabia pays a price for its market share, a price that fluctuates each month as market forces change. Saudi Aramco, the state oil company, earns about $1 a barrel less on sales to the United States than on sales to the countries of Europe and East Asia .....

    (The Battle for Energy Dominance By Edward L. Morse and James Richard Foreign Affairs March / April 2002)

    [8] from: "OPEC's symbolic move," Economist.com / Global Agenda. London: Jun 20, 2005. pg. 1


    [9] ARAB OIL EMBARGO and Yom Kippur War

    "In 1972 the price of crude oil was about $3.00 and by the end of 1974 the price of oil had quadrupled to $12.00." In between Syria and Egypt attacked Israel on October 5, 1973 starting the Yom Kippur War. Western countries, and especially the U.S., supported Israel, and Arab oil-exporting nations retaliated by imposing an embargo on them. "Arab nations curtailed production by 5 million barrels per day (MMBPD) about 1 MMBPD was made up by increased production on other countries. The net loss of 4 MMBPD extended through March of 1974 and represented 7 percent of the free-world production."
    from: http://www.wtrg.com/prices.htm


    [9] Hurricane Katrina and its damage to oil refineries is blamed for part of the late 2005 spike in fuel prices in the U.S.

    [10] To repeat an earlier quote (i.e. bin Laden interview with Hamid Mir, Pakistan, 18 March 1997):

    According to bin Laden the price of American wheat has increased threefold but the price of Arab oil has increased by no more than a few dollars over a period of 24 years - because the United States is dictating to the Arabs at gunpoint.` Bin Laden claims that over the last 13 years the United States has caused Arab nations a loss of more than $1100 billion. `We must get this money back from the United States.`

    bin Laden specifically talks about the price of American wheat. Its price has mainly fluctuated between $2 and $4.50/bushels for many years.
    $1.24 in mid-1968
    $6.50 in early 1974
    $2.10 sometime in 1977
    $5.00 in late 1980
    $4.45 in 1988
    $5.60 in early 1996 (almost one year before bin Laden's interview)
    $2.05 sometime in 2000
    price has averaged at $2.00-3.50 over the years
    source: CRB Commodity Yearbook, Commodity Research Bureau, 2005 p.306
    Prices are for No.2 Red wheat in Chicago until March 1982. After April 1982 for No.2 Soft Red traded in St. Louis.

    At the time of writing (Jan. 2006) its about $3.40/bushel.

    (To the best of my knowledge there is no reason for the price of U.S. wheat in Saudi Arabia to be appreciably higher than the market price in the U.S. plus shipping costs.)

    NOTE: You can find a time period where the price of wheat has increased by 3 times if you pick the right two points carefully, for example the price of wheat in the U.S. fell for many years after World War II and went below $1.50/bushel for much of the late 1960s; and there are a few months in 1973, 1980 and 1995-6 when wheat went above $4.50 a bushel. ... When bin Laden talked about the three-fold increase American wheat, though, wheat was not at one of these points.
    Wheat cost $3.50/bushel in March 1997 and 3.75/bushel April 1997. You would have to go back to the Great Depression to find a year when the price of wheat was one third that.


    [11] OIL WENT UP 10 TIME IN PRICE: from $3 a barrel in 1972 to $35 in 1980 (nominal dollars, i.e. not adjustied for inflation) WHY DEMAND WENT DOWN IN THE EARLY 1980S

    Oil accounted for 49 percent of the West's total consumption of primary energy in 1972 but just around 40 percent in 1990. These trends are expected to continue over the next two decades. According to the U.S. Department of Energy, oil will constitute 38 percent of total energy consumption in 2000 and 37 percent in 2020. ....
    Production in 1976 came to 37 percent of the world total and by 1985 was estimated at just 17 percent of world output. This trend then reversed itself, though not to the point of returning to the mid-1970 levels; in 1996 the Persian Gulf produced 27 percent of world oil.

    (from: How Important is Saudi Oil? Middle East Quarterly March 2000)
    http://www.meforum.org/meq/article.php?id=42

    "From 1980 to 1986 non-OPEC production increased 10 million barrels per day." [source: http://www.wtrg.com/prices.htm]


    [11a] $35/barrel in 1981 ... it's just that it didn't stay there long. http://www.wtrg.com/oil_graphs/oilprice1947.gif OIL PRICES WENT UP BY 10 TIMES

    From $3/barrel in 1972 (http://www.wtrg.com/prices.htm ) to $35/barrel in 1981 (http://www.wtrg.com/oil_graphs/oilprice1947.gif) (Prices are nominal, i.e. not adjusted for the inflation they in large part provoked.)

    WHY SAUDI PUMPED MORE OIL AND ALLOWED PRICES TO FALL IN 1985-6

    During this time (1980 to 1986), the burden of cutting production to keep prices up fell to Saudi Arabia whose share of world oil production declined from 16% in 1980 to 6% by 1985.
    [source: OPEC Annual Statistical Bulletin, 1996, (Vienna: OPEC, 1996), p. 14-15.]
    August 1985 Saudi gave up on keeping production down.

    From 1982 to 1985 OPEC attempted to set production quotas low enough to stabilize prices. These attempts met with repeated failure as various members of OPEC would produce beyond their quotas. During most of this period Saudi Arabia acted as the swing producer cutting its production to stem the free falling prices. In August of 1985, the Saudis tired of this role. They linked their oil prices to the spot market for crude, and by early 1986 increased production from 2 MMBPD to 5 MMBPD. Crude oil prices plummeted below $10 per barrel by mid-1986.
    from: WTRG Economics, "Oil Price History and Analysis"
    http://www.wtrg.com/prices.htm

    [12]
    Population of Saudi and Gulf states:
    1950 24 million (est.)
    1998 116 million
    (source: The Middle East : Opposing Viewpoints, 1999)


    [13] The $200 billion annual oil income used for the $20,000/year and $8000/year numbers was made up for ease of calculation. What's the real yearly revenue?

    "OPEC estimates Saudi Arabia's net oil export revenue for 2004 at $115.6 billion, and the forecast is for export revenues of $154.3 billion for 2005."
    (from: "Press Corner, The "Super Spike" in Oil Prices - Implications for the U.S. and Saudi Arabia," By Dr. Nimrod Raphaeli, August 24, 2005
    http://www.freemuslims.org/news/article.php?article=863 )


    Saudi population of 10 million in 1980
    (from: Washington Post, February 11, 2002; Page A01, "Marriage of Convenience: The U.S.-Saudi Alliance")
    (Tom Friedman in New York Times (February 20, 2002) recons the 1980 pop was more like 7 million.)


    [14] OPEC has had trouble even stabilizing prices not too long ago ....

    "...Russia's oil revival has coincided with a downturn in the global economy and the first major reduction in the global demand for oil since the early 1980s. The nearly 1 mbd increase in its production over the last two years came at a time when OPEC cut output, thus losing market share, to put a floor under prices..."
    (from: "The Battle for Energy Dominance," By Edward L. Morse and James Richard Foreign Affairs, March / April 2002)
    http://www.foreignaffairs.org/articles/Morse0302.html


    [15] ADVANTAGES OF THE LOW PRICE POLICY

    Reserve Size: 65% of the world's known oil reserves are located in the Gulf countries, which produce over a 1/3 of the world's daily output. By comparison, North America holds 8.5% of the world's reserves.
    (from: Persian Gulf in Transition by Lawrence Potter, Foreign Policy Association 1998)

    Production costs: $2 a barrel cost for Persian Gulf compared to $10 average in the U.S. or $11 in the North Sea.
    (from: The Economist, "Special article: Cheap Oil: The next shock?" March 6, 1999)


    Zaki Yamani, founder of the "London-based Center for Global Energy Studies," thinks Saudi should concentrate
    on a long-term policy of enlarging market-share by lowering oil prices 23. Hani al-Yamani, Zaki's eldest son, takes this strategy to an extreme; in his opinion, the decline in the centrality of oil as a source of energy and the price reductions which ensued is an irreversible process which will continue unless Saudi Arabia regains control over the oil market. Rather than letting market forces shape Saudi Arabia, he claims that Saudi Arabia should take the initiative and shape market forces. He proposes to step up Saudi production to 20 million b/d over a five-year period, lower oil prices to about $10 per barrel and obtain long-term contracts to recapture a market share. In his view, this policy will preempt the development of new oil fields and alternative sources of energy by rendering them economically unfeasible. This, in turn, will increase demand for Saudi oil.
    from: "How Important is Saudi Oil?" by Sarah Yizraeli, Middle East Quarterly, March 2000
    http://www.meforum.org/article/42/

    see also: Hani Zaki al-Yamani, To Be a Saudi, (London: Janus Publishing, 1997), p. 90-101.

    The following table lists the top ten nations by proven oil reserves[7] in

    2005:

    Rank Country 109 Barrels
    1 Saudi Arabia 261.9
    2 Canada 178.8
    3 Iran 125.8
    4 Iraq 115.0
    5 Kuwait 101.5
    6 United Arab Emirates 97.8
    7 Venezuela 77.2
    8 Russia 60.0
    9 Libya 39.0
    10 Nigeria 35.3
    -- World Total 1188.5-
    1227.2

    http://en.wikipedia.org/wiki/Oil_reserves
    (source: http://www.eia.doe.gov/emeu/international/reserves.html )

    [16] CORRUPTION

    Until the mid 1960s, when Nasser's propaganda machine publicized it to incite the Saudi people against their rulers, the budget of the House of Saud was published and known to all. Except for periods under King Saud when it rose to over 30%, most years it amounted to 15-17% of the national budget. King Faisal changed all that and characteristically found ways to hide his family's colossal theft. Of the 15 people I asked the same question, not a single oil expert, journalist, former diplomat, think-tank member, Saudi merchant or opposition member was willing to discuss the process by which the budget of the House of Saud, the money paid to members of the royal family as salaries and `benefits', is now determined.
    (from: The Rise, Corruption and Coming Fall of The House of Saud by Said K. Aburish, p.294)
    More on CORRUPTION

    (FROM: "Fall of the House of Saud" by Robert Baer, Atlantic Monthly May 2003

    One particularly spoiled young prince (by the name of Abdul Aziz) spent $4.6 BILLION on a palace complex and theme park even while commoners incomes fell and their unemployment rose. The rest of the royal family (numbering around 10,000), get between $800 and $270,000 a month in stipends for their lives of leisure. As their numbers grow so do the royal stipends. Rather than get jobs or cut back on social season in the Riviera, princes are turning more and more to corruption. They are "getting involved in arms deals, expropriating property from commoners, selling Saudi visas to guest workers" and borrowing money from banks they refuse to pay back.

    The most glaring example of the how U.S. elites and corporations profit from the corrupt Saudi status quo is the Saudi military. "Saudi Arabia may spend more per capita on defense than any other country in the world (some estimates put the figure at 50% of its total revenues)." Rather than provide jobs for the Saudi people, most of this goes to buy planes, missiles, and weapons systems and most of those are bought from U.S. corporations. This generates big commissions (bribes) for well-connected Saudi royals, but apparently doesn't do much to protect Saudi Arabia. When Saddam invaded Kuwait in 1991 the Saudis had to go into debt to pay ANOTHER $55 billion to the U.S. led allies to evict Saddam. ("Saudi Arabia - Over a Barrel," Foreign Affairs, May-June 2000 v79 i3 p80.)


    WHAT SAUDI OFFICIALS SAY ABOUT CORRUPTION
    `... Prince Bandar bin Sultan, the Saudi ambassador to the United States, said recently that of the $400 billion or so Saudi Arabia has spent over three decades to construct a modern nation, perhaps $50 billion was lost to corruption or mismanagement. "So what? We did not invent corruption," he told a PBS interviewer. ... `
    "Marriage of Convenience: The U.S.-Saudi Alliance, Oil for Security Fueled Close Ties But Major Differences Led to Tensions" By Robert G. Kaiser and David Ottaway,
    Washington Post, February 11, 2002; Page A01
    http://www.washingtonpost.com/wp-dyn/articles/A55265-2002Feb10.html


    The $1/barrel discount to the United States might be pointed to as a instance of corruption or at least subservience to the United States, but how much does it cost Saudi Arabia?

    Using numbers for the year 2005, the total for that year comes to $587.5 million/year (0.145 (share of imports to the US that come from Saudi) X 11.1 million b/d (US imports) X 365 days in a year) Not peanuts by any means, but even assuming it's a giveaway with no functional marketing value to Saudi, and that it's gone on for decades, it's not enough money to come anywhere close to adding up to $1100 billion allegedly stolen.


    HOW MUCH DO CRUDE OIL EXPORTERS LIKE SAUDIS GET OUT OF EACH GAS DOLLAR?

    Were Western oil companies selling oil from the gulf states low and selling in to consumers high? You be the judge: Most of the cost goes to refining, shipping, marketing, retailing, taxing; but producer profit is still high -- $0.95 out of $2.65 a gallon of gasoline.

    For example, on a gallon of gasoline/petrol in the U.S. costing $2.84, $1.28 went to pay for the crude oil, and $1.56 to pay for everything else -- refining, shipping, marketing, retailing, taxing.
    Where money for a $2.64 gallon of gasoline goes
    ExpenseAmount per gallon
    Production costs33¢
    Producer profit95¢
    Refining costs40¢
    Refining profit10¢
    Transportation costs12¢
    Transportation profit
    Marketing costs
    Marketing profit
    Retailer costs
    Retailer profit
    US Taxes19¢
    State taxes (avg. 23¢)6¢ to 39¢
    Local taxes0 to 20¢
    TOTAL$2.65

    from: http://www.gravmag.com/oil.html


    WHAT DOES SAUDI ARABIA DO TO CURRY FAVOR WITH THE U.S.?

    Everything from spend

    ... $100 billion on American weapons, construction, spare parts and support, and for years have ranked first in the world as a customer for American arms makers. They bought F-5 and F-16 fighter jets, AWACs observation aircraft, Abrams M-1 tanks, Bradley armored vehicles, naval vessels ...

    to

    `... In 1985, Fahd gave $1 million to first lady Nancy Reagan's "Just Say No" anti-drug program. In 1989, the king gave another million to first lady Barbara Bush's campaign against illiteracy. ...` $30 million for the Contras at the request of Ronald Reagan.
    Washington Post, February 11, 2002; Page A01

    " .... For years, the Saudis had sold oil destined for the U.S. market at discounts amounting to hundreds of millions of dollars annually to protect their place as primary foreign supplier, and thus to ensure their political influence and access in Washington."

    From: "Viewing Oil as a Bonding Agent Saudi Initiative Allowed U.S. Oil Firms' Return" Washington Post, February 12, 2002; Page A11

    http://www.washingtonpost.com/wp-dyn/articles/A60497-2002Feb11.html


    `... The kingdom does, for example, spend a great deal of money to have its image improved: $17.6 million on lobbyists in the US alone since September 11, according to the Justice Department. ...`
    From: "Unloved in Arabia" By Max Rodenbeck, New York Review of Books, October 21, 2004


    WHAT DO THE SAUDIS GET FOR THEIR MONEY?


    [17]Easy Visa Policy

    Until sometime before Nov. 2002 Saudis could "obtain visas to enter the United States without having to apply in person or be interviewed," under the State Department's Visa Express program. After 9/11, (15 of the 19 11 hijackers hailed from Saudi Arabia), the program was curtailed.

    In contrast American women traveling to Saudi Arabia alone needed a sponsor and would not be able to leave the airport until the sponsor escorted them. American's who wanted to visit Saudi on tourism could only visit as part of a tour group, and maybe not even then.

    Saudi has financed the construction of many mosques in America. Not only is the building of churches or any other non-Islamic edifice prohibited in Saudi, so is any "public display of the Holy Bible, crosses, the Star of David and the Torah, religious songbooks and Christian CDs."
    From "Statesmanship, Saudi Style," by Colbert I. King,
    Washington Post, November 23, 2002; Page A23
    http://www.washingtonpost.com/wp-dyn/articles/A28287-2002Nov22.html


    "The general knowledge is that it's easier to get a U.S. visa in Saudi Arabia" than it is in many other nations, said Larry Johnson, former deputy director for counterterrorism at the CIA. Last year, the United States issued 67,742 visas to people wanting to visit from Saudi Arabia.
    And once Saudis are in this country, they are virtually home free.
    Information obtained by The Seattle Times reveals that at least three of the 15 Saudi hijackers were here illegally, having overstayed the terms of their admission. But they probably knew they had little reason to worry: Of the tens of thousands of Saudis in the United States last year, only five were deported by the Immigration and Naturalization Service (INS) for such violations.
    (from: "Hijackers Utilized Lax View of Saudis," Salt Lake Tribune, November ?, 2001)

    Visa restrictions on foreigners visiting Saudi: from: http://www.cyborlink.com/besite/saudi-arabia.htm

    If you are not a Muslim, you may not enter Saudi Arabia without an invitation and you may not leave without an exit permit. Visitors to Saudi Arabia are subject to the same rigorous Islamic law as Saudis. It is not uncommon for Westerners to be imprisoned for possessing illegal substances such as alcohol, pornography, pork or narcotics. Thieves still have their hands amputated and capital crimes are punished by public beheadings.

    [18]Saudi Education

    RIYADH, Oct. 18 The textbook for one of the five religion classes required of all 10th graders in Saudi public high schools tackles the complicated issue of who good Muslims should befriend.
    After examining a number of scriptures which warn of the dangers of having Christian and Jewish friends, the lesson concludes: "It is compulsory for the Muslims to be loyal to each other and to consider the infidels their enemy." .....
    "One of the major requirements in hating the infidels and being hostile to them is ignoring their rituals and their festivities," the textbook says.
    Later in the chapter it is recommended that Saudi youth do nothing to imitate non-Muslims in the way they dress, walk, eat, drink, or talk. ...
    (from: New York Times, October 19, 2001
    "Anti-Western and Extremist Views Pervade Saudi Schools" By NEIL MacFARQUHAR)

    This "education" presumably plays a part in the state of SAUDI PUBLIC OPINION: "I don't know a man, woman, or child who was not happy about what happened in the U.S. [on 9/11/2001]" (Abdullah Al-Sabeh, a professor of psychology at Riyadh's Imam Muhammed bin Saud Islamic University, Business Week, 1/26/2001)


    [19] RELIGIOUS WORK IN THE US:

    From 1982 to 2003,

    the Saudi embassy in Washington has housed a `Department of Islamic Affairs,` directed by Prince Muhammad bin Faysal ibn Abd al-Rahman, who is active in Islamization programs for black Americans and who maintains contact with American Islamic organizations (such as the Muslim Students' Association, founded in 1963, one of whose leaders during the 1970s was Muhammad Abu Sayyid, an Egyptian MB now established in Saudi Arabia.
    (from: The Failure of Political Islam by Olivier Roy, translated by Carol Volk, Harvard University Press, 1994, p.130-1)

    At its height, ... The Islamic Affairs Department at the Saudi Embassy in Washington... had 35 to 40 diplomats and an annual budget of $8 million, according to a Saudi official. ... As late as last year [2003], it had 31 on its payroll ... The ministry also flooded the American Muslim community with Saudi-published Korans and publications. "The great majority of books and magazines were authored by Saudi agencies," said Maher Hathout, chairman of the Islamic Center of Southern California in Los Angeles. ... Late last year [2003], the Saudi Embassy in Washington dissolved its Islamic Affairs Department, reducing the number of diplomats dealing with religious issues to one.

    "U.S. Eyes Money Trails of Saudi-Backed Charities," Washington Post, August 18, 2004
    http://www.washingtonpost.com/wp-dyn/articles/A13266-2004Aug18_4.html

    Treatment of non-Muslim religious activity in Saudi see:
    "Statesmanship, Saudi Style" By Colbert I. King Washington Post, November 23, 2002; Page A23
    http://www.washingtonpost.com/wp-dyn/articles/A28287-2002Nov22.html


    PREACHING HATE AND JIHAD TOWARDS NONMUSLIMS:

    Saudi Publications on Hate Ideology Fill American Mosques,
    Center for Religious Freedom, Freedom House, 2005
    Study of "over 200 books and other [Wahhabi] publications," mostly in Arabic from "more than a dozen mosques and Islamic centers in American cities" collected between November 2003 and December 2004.
    Quotes from Saudi Publications on Hate Ideology ... ... books teaching Muslims to not only "always oppose" infidels "in every way," but "to hate them for their religion" [doc. 45, p.20] "for Allah's sake," [doc. #36, p.23] that democracy "is responsible for all the horrible wars" of the 20th century," [document 1 p.43] etc.;
    http://www.freedomhouse.org/religion/publications/Saudi%20Report/FINAL%20FINAL.pdf


    RELIGIOUS RESTRICTION IN SAUDI:

    "Though the Saudi government claims that people in the country are free to practice non-sanctioned religions privately in their homes, it often does not respect this right in practice. The Saudi religious police have continued to arrest and deport Christians for conducting private religious services. Saudi religious police continue to raid private homes where they suspect such services are taking place. They also continue to brutally enforce the country's overall policy of religious persecution, harassing, detaining, and beating people who they believe are straying from the officially sanctioned path." from "Statement of Mr. Tom Malinowski, Washington Advocacy Director [of Human Rights Watch] Before the Subcommittee on African, Global Human Rights and International Operations Committee on International Relations, Nov. 15, 2005 [Statement by Human Rights Watch on the 2005 State Department Religious Freedom Report, November 15, 2005, House Committee on International Relations]

    from: http://wwwc.house.gov/international_relations/109/mal111505.pdf

    [20]Support for Terrorism

    "Despite a crackdown on terrorism financing after the September 11 attacks, Saudi Arabia still must dismantle a system that has allegedly permitted hundreds of millions of dollars to flow to extremists through businesses and charities, a report recently submitted to the United Nations claimed.
    "Al Qaida was able to receive between $300 (million) and $500 million over the last 10 years from wealthy businessmen and bankers whose fortunes represent about 20 per cent of the Saudi GNP, through a web of charities and companies acting as fronts,'' claimed Jean-Charles Brisard, the investigator.
    (from: "Study claims terror money still slips through Saudi Arabia" Barcelona, Spain |By Sebastian Rotella | 28-12-2002
    http://www.gulf-news.com/Articles/news.asp?ArticleID=72255


    "An accredited diplomat of the Saudi Arabian consulate," Fahad al Thumairy, served as an imam at King Fahd mosque in Los Angeles, "from 1996 until [May] 2003, when he was barred from re-entering the United States because of terrorist connections." King Fahd mosque's namesake donated $4 million for the mosque's construction
    http://www.saudiembassy.net/1995News/News/IslDetail.asp?cIndex=4469
    and continued "official support" for it after it's completion.

    It is not thought to be a coincidence that upon arrival in the United States, Saudi 9/11 hijackers Nawaf al Hazmi and Kaqhalid al Mihdhar "promptly made the King Fahd mosque the center of their lives, the base from which they received assistance, made friends ..."
    (source: Final Report of the National Commission on Terrorist Attacks Upon the United States, The 9/11 Commission Report, W.W. Norton & Company, New York, pp.233)

    Al-Haramain Foundation, headquartered in Saudi Arabia, had "branch offices in the United States until the FBI blocked its assets in February 2004, finding that it was directly funding al Qaeda."

    (italics added. source: Saudi Publications on Hate Ideology Fill American Mosques, Center for Religious Freedom, Freedom House, 2005, p.3,4)


    WHAT THE US SPENDS ON THE PERSIAN GULF

    Graham Fuller and Ian Lesser contend that the U.S. spends $30-60 billion annually for military defense of the Gulf states.
    Fuller, Graham E. and Ian Lesser, "Persian Gulf Myths," Foreign Affairs, May-June 1997, pp. 42-52.


    [21]"America's deeply cynical relationship with Riyadh"

    "... Students of America's deeply cynical relationship with Riyadh have long known that the kingdom did little to discourage Islamic extremists, as long as they operated outside its borders, and that Washington muted its objections to keep oil flowing to the West. ..."
    "Reconsidering Saudi Arabia" New York Times, October 14, 2001


    OTHER EXAMPLES OF PRIVLEDGED TREATMENT OF, AND ODDLY ANTIAMERICAN BEHAVIOR BY, SAUDI ELITES

    On one of the few occasions high-level anger was expressed by Washington to Riyadh, (for Saudi's buying of Chinese CSS2-class missiles that had long enough range to hit Israel), the King of Saudi Arabia was so outraged he demanded that Washington fire the man it had sent to convey the message (Ambassador Hume Horan, the foreign service's best Arabic linguist who had worldwide-ranging contacts in Saudi society). The U.S. immediately complied.
    "Marriage of Convenience: The U.S.-Saudi Alliance, Oil for Security Fueled Close Ties, But Major Differences Led to Tensions," by Robert G. Kaiser and David Ottaway, Washington Post, February 11, 2002; Page A01


    ... A year after September 11, Prince Nayef, the minister of interior, was still denying that Saudis were involved. A year after that, he denied that al-Qaeda had any significant presence in the kingdom. ...

    From: "Unloved in Arabia" By Max Rodenbeck, New York Review of Books, October 21, 2004

    Hurried repatriation of rich Saudis in the immediate aftermath of September 11,

    "White House Approved Departure of Saudis After Sept. 11, Ex-Aide Says," By Eric Lichtblau, New York Times, 04 September 2003

    WASHINGTON, Sept. 3. Top White House officials personally approved the evacuation of dozens of influential Saudis, including relatives of Osama bin Laden, from the United States in the days after the Sept. 11, 2001, attacks when most flights were still grounded, a former White House adviser said today.

    The adviser, Richard Clarke, who ran the White House crisis team after the attacks but has since left the Bush administration, said he agreed to the extraordinary plan because the Federal Bureau of Investigation assured him that the departing Saudis were not linked to terrorism. The White House feared that the Saudis could face "retribution" for the hijackings if they remained in the United States, Mr. Clarke said. ....


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