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Buying In. From that point on, the Arab oil states have been raising prices with impunity, and some are demanding ever larger "participation" shares in the ownership of the oil companies. None is in a stronger position than Saudi Arabia; through a buy-in plan (a form of nationalization) that started this year, Feisal's government owns 25% of Aramco, and that share will rise to 51% in 1983. Last year the Saudis earned $2.2 billion from oil, and their profits are bound to increase this year despite the production cutback—because they have just raised oil prices by 70%. For example, Arabian light oil now sells for $5.11 a bbl., not counting the cost of shipping it to the U.S. By contrast Texas oil costs about $4 a bbl.
Even if Saudi Arabia buys arms for other Arab countries, helps finance the rebuilding of their war-battered economies, continues its own development programs and holds to a 25% cutback in production of crude, its monetary reserves will rise from around $4.5 billion to $20 billion in 1975. Most of its reserves are on deposit in banks in the U.S., Britain, Switzerland and France. Thus, the Saudis will have increasingly great world financial power.
Feisal insists that he wants to be on friendly terms with the U.S. and that both countries have much to gain in a close relationship. American oil companies and other contractors operating in Saudi Arabia repatriated $1 billion in profits to the U.S. last year, a healthy contribution to the nation's balance of payments. The Saudis are also the biggest Middle Eastern customers for American goods and services, such as airplanes, heavy construction gear and consulting assistance. Feisal, religiously conservative and vigorously antiCommunist, is even more worried than U.S. leaders about the spread of Soviet influence in the Middle East.
The King's other great hate is, of course, the Zionists, whom he oddly equates with Communists, despite Israel's pro-Western, anti-Soviet stand. He is enraged that the Israelis control the Moslem shrines in Jerusalem, and he probably will not be satisfied until Moslems regain authority over the Arab part of the city. Says one Western diplomat: "The old man is getting more religious than he has been. He wants to pray in the Mosque of Omar before he dies."
Whether or not Feisal gets his wish and starts the oil gushing again, his use of the petroleum embargo has shocked the U.S. into vastly changing its energy policy. Under the best of circumstances, it could take at least 15 years for the nation to fulfill the goal of becoming self-sufficient in energy. During that time the U.S. may well remain dependent to some degree on the Middle East. Of course, there is plenty of oil outside the Arab sphere of influence; including deposits in Iran and the Communist world, these proved reserves exceed 190 billion bbl. Thus the U.S. can increase its oil Imports from Venezuela, Nigeria and Indonesia, but the greater the demand from these countries, the higher their prices are likely to go.
Though the nation has vast potential resources of petroleum, oil shale, natural gas and coal, not to mention nuclear energy, they will be neither cheap nor easy to exploit. But they will be exploited now because the price is right.