OIL: Shadow over Aramco

Surely one of history's greatest bargains, ranking with the legendary purchase of Manhattan for $24, is an obscure contract negotiated in 1933. For a loan of exactly $170,327.50, Saudi Arabia's King Abdul Aziz ibn Saud granted the Standard Oil Co. of California a 60-year, exclusive concession to 320,000 sq. mi. of desert. So huge were the oil reserves when finally discovered, and so large the investment needs, that SoCal could not exploit them alone. It took on co-venturers, forming the Arabian American Oil Co.

Aramco now operates under the shadow of nationalization. The...

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