Rushing to work last week, John Doe, American, swung his car onto the freeway—only to discover that the posted speed limit had been reduced from 60 m.p.h. to 50 m.p.h. When he stopped at a gas station for a refill, he learned that overnight the price had gone up 2¢ per gal. At his office he felt unusually cool because the thermostats had been pushed down a couple of degrees, to a brisk 68º. Later, when he finished work and was driving home, he noticed that the lights on outdoor advertising signs had been doused. In his living room he was greeted by his children, who gleefully reported that their school would be closed for a month this winter—in order to save oil.
In the backward but wakening desert kingdom of Saudi Arabia, there was plenty of oil, and the wealth that it brought was beginning to show. Building cranes stuck their necks up everywhere in the few cities; Ferraris and Mercedes glistened in the showrooms, and the markets bulged with imported consumer goods. The national treasury was overflowing with foreign exchange, and there was talk of starting new industries to be fueled and financed by oil: petrochemicals, aluminum, steel. Indeed, Saudi Arabia was strong enough that it could afford to cut back oil production in order to make the rest of the world pay a higher price for it—in more ways than one.
As the voracious demand for oil increasingly outstripped new sources of supply in recent years, an energy crisis crept up on the world with fateful inevitability. Yet, despite spreading signs of scarcity, most government leaders in the U.S., Europe and Japan paid little heed to calls from oilmen for urgent measures to expand energy resources and curb waste. Instead, they chose to believe that there was time to formulate some painless strategy to avert a genuine global emergency.
Now time has abruptly run out. The Arabs, who control nearly 60% of the world's proven deposits, are slowing down the flow. Through this strategy of squeeze, they hope to pressure the industrial nations into forcing Israel to make peace on terms favorable to the Arabs. Moreover, they are steadily intensifying their oil shakedown. Originally they planned to reduce production by at least 5% each month. Later they embargoed all oil shipments to the U.S. and The Netherlands, in punishment for their support of Israel. Last week, showing new unity and clout, ten Arab countries announced that production for November will be slashed a minimum of 25% below the September total of 20.5 million bbl. per day. Though there has been promising progress toward a lasting settlement in the Middle East, the Arabs vow that they will continue their cutbacks and embargoes until Israel withdraws behind its 1967 borders and settles the Palestinian refugees' claims for land or money—or both.