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    The Prize 
Daniel Fisher and Lynn Cook, Forbes Magazine , 11.12.01 
The war against Osama bin Laden is also a contest for the world's largest producer of oil--and a way of life that underlies the American economy.
Hijackings and Anthrax could be just a warm-up to a very different kind of terrorism. The next thing we may have to worry about is a civil war in Saudi Arabia that turns oil into a weapon against the U.S. economy. 
Forget all the rhetoric about ousting infidels and saving starving Iraqis and oppressed Palestinians. Osama bin Laden's primary goal is to overthrow the ruling Al Saud family of Saudi Arabia. This subpopulation of 30,000 (in a country of 22.7 million) includes some 5,000 princes who control virtually all aspects of government and the military. Success would turn the kingdom's 260 billion barrels of crude--25% of the world's proven reserves--over to hostile hands. A fundamentalist government in Saudi Arabia would be "ten times more powerful [than] Iraq or Iran," says Nawaf Obaid, a Saudi-raised oil expert and Ph.D. candidate at MIT who has written extensively about internal struggles in Saudi Arabia. "They could make the Iranian mullahs look like babies." 
Most observers, Obaid included, consider such a revolution unlikely. But bin Laden, Saudi Arabia's own homegrown terrorist, could wreak havoc with oil supplies in other ways--starting with simply surviving the attacks. The longer bombs fall on Afghanistan, the stronger the sympathy for the militants. The Al Saud family is vulnerable to intense internal pressure, especially from the ulema, or senior Muslim clerics. These are the self-appointed guardians of Saudi Arabia's dominant Wahhabi faith, a puritanical strain of Islam from which the royal family derives its legitimacy. The ulema could force the rulers to choose between loyalty to Wahhabism and adherence to a West-leaning policy favoring stable oil prices. 
It has happened before. Threatened by Iraq, the house of Saud tilted westward during the Gulf war and kept exports flowing. But in 1973, Obaid suggests, the ulema pushed King Faisal to impose an oil embargo on the U.S. to punish it for supporting Israel in the October war of that year--helping to shove America into a 15-month recession. 
The U.S. is even more dependent on Saudi oil than it was when we were driving gas-guzzlers in 1972. Even as the average car's fuel efficiency has risen 58% since then, U.S. oil consumption has risen 19% to 19.5 million barrels a day. Domestic oil production over the same period has fallen 39% to 5.8 million barrels. The rest of the crude is imported, with 1.5 million barrels coming from Saudi Arabia, a close second to Canada. 
America imports almost as much oil from Mexico and Venezuela. But the Saudis hold the whip hand in the oil market, thanks to their ability to increase production by as much as 2.5 million barrels a day--or cause a worldwide shortage by turning off the spigots. A terrorist bomb like the one that destroyed Khobar Towers in Dhahran, killing 19 U.S. servicemen in 1996, could achieve the same thing as an embargo by taking out Saudi Arabia's Ras Tanura export terminal, which can pump up to 5 million barrels a day into supertankers. "It doesn't matter if we find 1.5 million barrels from somewhere else, if 5 million barrels a day are removed from the world market, prices will spike," says David Pursell, a director at Simmons & Co. in Houston. 
Any price increase has devastating effects on the U.S. economy. Each dollar increase in the per-barrel price of oil trims airline margins by half a percentage point and cuts profits by $450 million, says Goldman Sachs analyst Glenn Engel. Consuming 45 billion gallons of fuel a year, truckers are vulnerable, too: Trucking-company failures tripled from the previous year to 1,320 in last year's third quarter, as fuel prices rose 50%. 
The pain has a widening circle. Since oil is easily substituted for natural gas in many industrial and electrical turbines, prices of the two commodities tend to be correlated (coal less so). Stephen Brown, a senior economist at the Federal Reserve Bank of Dallas, estimates that a 30% increase in the price of oil, sustained for two years, would trim U.S. gross domestic product by nearly 0.8%, or $800 billion a year, and decrease employment by 0.3%. 
And that's just an increase to $28 a barrel. Push the price of oil past $40 and refiners and petrochemicals manufacturers wither as economic activity plunges and costs rise faster than the prices they can charge. 
Chart Fueling Geopolitics  
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