Oil Problems Before the Peak

We have discussed the Peak Oil problems we will be facing in Oil, Half Way To Empty and Oil, the very very wild card. The discussion was centered around the diminishing supply and increased demand. We have mentioned that geo-political events could result in supply shortages sooner than Peak Oil would predict. In The Asia Times B Raman explains that just such a geo-political problem may be brewing in Saudi Arabia.

Attention has to be focused on Saudi Arabia as it enters a period of transition and uncertainty in the wake of reports about a deterioration in the health of King Fahd, who has been admitted to the hospital. In the absence of authentic reports on his health, rumors are rife that his end may be near.

The post-Fahd transition should be a matter of concern to India. Any instability and violence could have an impact on the flow and price of oil and on the so-called "war on terrorism". Such instability could be caused either by challenges from other members of the ruling family to the efforts of Crown Prince Abdullah, the designated and widely expected successor, to consolidate his power and his control over the National Guard, the armed forces and the intelligence agencies, an escalation in the activities of al-Qaeda or both.

Al-Qaeda in Saudi Arabia remains strong in spite of heavy handed persecution by the ruling House of Saud.

Al-Qaeda in Saudi Arabia has shown tremendous resilience, despite being subject to ruthless suppression by the Saudi security forces. The loss of its leaders, one after the other in encounters with the security forces, has not dented the network's morale, motivation and determination. It has shown a remarkable capability to rise again and again after each fall and make its presence felt.

The spawning of so many jihadi terrorists from Saudi Arabian soil for participating in acts of jihadi terrorism, either in Saudi territory, in Iraq or elsewhere, indicates that the world has until now seen only the tip of the Saudi jihadi iceberg. There are innumerable sleeper cells in Saudi Arabia that have been keeping the international jihadi terrorist movement sustained through the injection of funds, volunteers for suicide missions and other means.

The success of these sleeper cells speaks of local support - in the general populace as well as in the intelligence agencies and the security forces. And, possibly, in some sections of the ruling family too. Without such support, it is inconceivable that there could have been an uninterrupted flow of volunteers for suicide missions in Iraq without being intercepted.

We discussed the fact that Saudi Arabia is ripe for unrest in Tyranny, terrorism and oil in Saudi Arabia. The Saudi Jihadists have been very active in Iraq and learning the techniques of sabotaging the oil production infra-structure. Any instability in Saudi Arabia that results from the death of King Fahd could, or perhaps would increase the possibility of disruption of Saudi oil production which would lead to sky rocketing increases in the cost of oil and cripple the world economy over night.