Op-ed: Does Saudi Oil Still Matter?

Much of the world is rapidly moving away from oil-based economic growth and most months America imports very little oil from Saudi Arabia. As Asia assumes growing importance, the Middle East remains a powder keg requiring inordinate amounts of Washington’s attention. Why not turn our attention to more immediate problems with more promising solutions? One reason is that Saudi oil remains surprisingly important to both national prosperity and security. 

Oil still provides one-third of the global energy mix and the International Energy Agency predicts that global oil demand will continue to rise for at least another decade. Saudi Arabia still holds roughly 20% of global oil reserves and provides10% of global production every day. It is by far the world’s largest oil exporter, in not always the largest producer. Saudi Arabia is also one of the world’s lowest cost producers; so even as demand eventually falls, the Saudis will likely supply our last commercially produced barrels of oil. 

In 1973 when an oil embargo crippled the American economy, we imported roughly 6 million bbl/d of oil. We still do. Claims that America was briefly energy independent were based on the fact that we export natural gas and refined products, not that we no longer import crude oil. Moreover, many of our most important trading partners including China, Japan, Korea and Taiwan remain heavily dependent on Saudi oil. Their ability to supply goods we need or purchase goods we produce is closely tied to their access to stable oil supplies at affordable prices.