Defeating oil

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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 can 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 monoxide. 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.


Originally published in The Jerusalem Post.

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