Breaking OPEC’s Grip
A flex-fuel mandate would stop the U.S from funding its enemies.


Robert Zubrin

“To wage war, three things necessary: money, money, and yet more money.”

– Gian-Jacopo Trivulzio, Marshal of France, 1499

A lot has changed since the turn of the 15th century, but Marshal Trivulzio’s famous aphorism still holds a great deal of truth. Yet Americans don’t seem to be heeding its implications. In fact, in waging the war on terror, the United States seems to be doing its best to fund its enemies.

Consider the following: In 1972, the U.S. paid out $4 billion for oil imports, an amount equal to 1.2 percent of our defense budget at that time. In 2006, we paid $260 billion — about half of what we paid for national defense. Over the same period, Saudi oil revenues have grown in direct parallel: from $2.7 billion in 1972 to $200 billion in 2006 — which will likely exceed $300 billion this year. Much of that money is being used to fund an international network of front organizations and Wahhabist madrassas devoted to spreading terrorist ideology. Meanwhile, Iran is using its share of the take to fund its nuclear bomb program, as well as terrorist groups like Hezbollah.

If something isn’t done to break the Organization of Petroleum Exporting Countries (OPEC) — the cartel that dominates and manipulates the global oil market — the situation is likely to get much worse: With China and India industrializing rapidly, world demand for fuel is going up. OPEC is positioned to exploit this new demand with radical price hikes that go well beyond the 50-percent increase it effected during 2007 alone. Venezuela’s Hugo Chávez and Iran’s Mahmoud
Ahmadinejad are already calling for prices of $200 per barrel. In short, we Americans are financing a war against ourselves — and the way things are going, we may soon be paying the enemy more than we are paying our own military.

The enemy’s unconstrained ability to loot us is also threatening our economy. Consider this: Congress is raiding the public purse to put $140 billion back in the pockets of American consumers, in the hope that this will provide an economic stimulus to prevent recession. Yet by paying $100 per barrel of oil, we are allowing OPEC to set oil prices high enough to take more than triple that amount out of Americans’ pockets. If Chávez and Amadinejad have their way, our economy will soon be drained at a rate of nearly $900 billion per year, an economic de-stimulus tax package six times as large as anything Congress has put on the table to push the other way.

The economic depression resulting from $200-per-barrel oil would be nothing compared with an oil cutoff, which could be accomplished by an OPEC or Arab League embargo, or result from the irrational action of any number of lunatic forces at large in the Gulf. In 1973, the Arab oil embargo threw our economy into chaos — and, at that time, we produced 70 percent of the oil we used annually. Today, we produce only 40 percent of our own fuel, and the consequences of another cutoff would be catastrophic. Our continuing vulnerability on this score is a sword of Damocles hanging over the head of Western civilization — a disaster waiting to happen, and a tool for blackmail that prevents us from taking the necessary steps to defeat the Islamist threat.

In light of this, the top priority of U.S. national-security policy must be to break the oil cartel. This imperative has been apparent since the 1973 oil embargo, but no progress has been made. The only policy solution we’ve tried — domestic energy conservation — has failed, and will continue to fail for two reasons. First — putting aside the near-impossibility of getting American consumers to use less fuel — global demand will continue to grow, so it’s scarcely conceivable that domestic conservation efforts could affect the global oil price. Second, even if we could hypothetically create global conservation, OPEC could simply cut production to keep demand — and prices — high.