In the years since, the United States has become an energy titan. In November, for the first time in decades, the United States briefly exported more oil than it imported. But a historian who read Epstein’s story in 2019 said some of it felt like it could have been written yesterday. Ellen Wald, the author of Saudi, Inc.: The Arabian Kingdom's Pursuit of Profit and Power and the president of Transversal Consulting, found important contrasts when comparing the snapshots represented in Epstein’s 1983 article with today’s energy story.
1. Saudi Arabia’s oil power stems from one factor: control. When ministers from the countries that make up OPEC gather, Saudi Arabia is first among equals. “Production decisions are made in Riyadh, not Vienna,” Saudi Arabia’s then–oil minister, Ahmed Zaki Yamani, said in the 1980s. Saudi Aramco, the national oil company owned by the royal family, can today, in principle, pump up to 12 million barrels of oil a day. What has always given the Saudis their power is the ability to produce less if they want to drive up prices.
What may not have been clear in the 1980s, according to Wald, was that the Saudis didn’t always have this control. Aramco was originally an American creation, and it was historically owned by four Western oil companies. The Saudis slowly bought them out, but at the time of the embargo, the Saudis owned only 25 percent of the company. In an episode Wald researched for her book, Yamani had to go to Aramco’s American CEO to tell him to implement the embargo. Wald paraphrased their conversation for me: “The CEO said to him [that] he didn't think they'd be able to do this embargo and these production cuts. And Yamani, the Saudi oil minister, responded, ‘Oh yes. We've discussed that. We'll be able to do it because you are going to do it.’ And that was that.” The American fell into line.
Now the Saudis fully own Aramco and no longer need to ask permission to change production. “They have this one room where they can literally control any of the oil taps and all of the refineries. They know where all of their ships are, and every barrel of oil being produced,” Wald said. “With the flick of a switch they can turn their oil production down.” Compare that with the United States, where oil is produced by dozens of independent companies. Antitrust laws prohibit OPEC-style coordination with other producers.
2. OPEC is still toothless, but it remains a convenient enemy. If production decisions are made in Riyadh, what’s the point of a Vienna-based faux oil cartel? “Every time everyone gets together for an OPEC meeting, that's the No. 1 question,” Wald said. History provides some insight. As Carter was struggling with a response to the oil shock, which was caused in part by Saudi maneuvering, an adviser turned to him with a proposal. “With strong steps we can mobilize the nation around a real crisis and with a clear enemy—OPEC,” a memo suggested. “OPEC made an especially convenient ‘clear enemy’ precisely because it hardly existed,” Epstein wrote. “If a real country were chosen for this role, there would be real consequences.” OPEC’s existence gave plausible deniability not just to its members but also to its adversaries, including the United States.