NO BLOOD FOR OIL. Remember that bumper sticker from the Iraq war? Today the spilling of blood is once again implicated in the security of the oil supply. This time, though, the blood belongs not to American soldiers but to Arab protesters demanding democratic freedoms. Rather than lower prices at the gas pump, civil strife appears to be raising them. Should gas prices continue to spike, the Arab world’s re-enactment of Europe’s revolutions of 1848 may inspire consumers in the United States and the rest of the industrialized world to slap a new sticker onto their bumpers: LESS FREEDOM, MORE OIL.
At first the Middle East’s pro-democracy movement didn’t affect significantly the global movement of oil. Tunisia, where the movement started, doesn’t have much oil, and Egypt is a net importer. But traders started bidding oil prices up almost immediately out of fear that the anti-government protests would spread, as indeed they did to Libya. Libya is a major oil exporter to Europe, and since the protests began, its oil output has been halved. The Saudis upped production by half a million barrels per day to stabilize the market, but much of that oil, because of its higher sulfur content, makes for “imperfect substitutes,” according to the International Energy Agency.
Forces still loyal to Muammar Qaddafi continue to massacre Libyan rebels, making humanitarian concerns foremost in everyone’s mind. But as the governments of the U.S. and the United Kingdom weigh military options to push Qaddafi out, they are surely aware that the longer oil supplies remain jeopardized, the greater the potential damage to the world economy. It’s never a good time for an oil-price shock, but with the U.S. economy struggling to recover from the 2008 recession, with unemployment at 9 percent, with the housing market possibly headed downward once again, and with European economies similarly fragile, right now would be an unbelievably bad time.
So how much Arab freedom is too much Arab freedom?
The question may offend, but the answer is obvious: A sudden popular uprising in Saudi Arabia to overthrow the Saudi monarchy would almost certainly bring about a worldwide recession. As the Council on Foreign Relation’s Rachel Bronson noted in the Feb. 27 Washington Post, “Washington does not want the Saudi monarchy to fall.” Bronson emphasized strategic reasons (bulwark against terrorism, counterweight to Iran), but the Saudis are also the world’s biggest petroleum exporter; they sit atop one-fifth of the world’s proven oil reserves. “If Saudi Arabia starts to rumble,” writes Thorbjørn Bak Jensen of Global Risk Management, then “$120 per barrel oil is cheap.” (Right now it’s at $112 per barrel.) If not, and if Qaddafi steps down, and “peace and quiet spread in the involved countries,” then $120 per barrel oil “is expensive.”
Although Saudi King Abdulla has instituted a few small reforms during the past five years, the country’s political culture remains essentially medieval. No public criticism is permitted of the country’s monarchical rule, there is no penal code, and women are not permitted to drive. A continuing system of male guardianship prevents women from traveling overseas, undergoing certain kinds of surgery, and appearing in a government office without first receiving the consent of a male family member. Male guardians have complete freedom to rape or otherwise physically abuse their female charges; domestic violence is not illegal. Religious freedom is virtually nonexistent. The nonprofit Freedom House annually rates countries on a freedom scale of 1 (Sweden) to 7 (North Korea). In 2010 it gave Saudi Arabia a 6.5. Libya was rated a bit worse at 7, but Egypt and Tunisia, prior to their governments being overthrown, rated better, at 5.5 and 6, respectively.
On March 11, a “day of rage” is scheduled in Saudi Arabia. In all likelihood the Saudis will keep a tight lid on it. If they don’t, the result could be the Mideast’s most astonishing stride yet toward individual freedom and democracy. But a sudden, uncontrollable popular uprising in Saudi Arabia would likely be catastrophic, economically, for the rest of us. Perhaps it’s just as well that we have little ability to influence the outcome one way or another.