Why the Saudis aren't lifting a finger to ease oil prices

Their break from past oil policy is significant.

from the February 6, 2008 edition

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Then there's the threat of global warming, which is pushing oil consuming nations to find other ways to produce energy. A mentality of "the future is now" may be developing in oil-rich countries. The Saudis have massive oil reserves, but these will be worthless in the future if the world finds a way to use biofuels, batteries, or other fuel to power cars. So the notion may be to cash in on high prices now.

There is at least a minor possibility of something more ominous affecting the Saudi decision: The Saudis have been quiet because they are getting global markets ready for the possibility that they may not have enough oil to be a long-term fuel pump to the world. Consider that the US Energy Information Administration (EIA) significantly scaled back how many barrels of oil it expects the Saudis to produce in 2010. In 2000, the EIA forecast for Saudi production in 2010 was 14.7 million barrels per day. But last year, the EIA dropped that figure to just 11.4 million barrels per day. That's a major reduction.

The Saudis and OPEC once again decided not to raise oil production last week. That's unfortunate. Though a 1970s-style, oil-triggered recession marked by stagflation – stagnation plus inflation – does not seem likely, high oil prices will contribute to any looming US and global recession.

Whatever their reason for not acting, the Saudis' behavior throughout the past year indicates that we're in a new oil policy ballgame. It's one that should give the US reason to hasten its efforts to achieve greater oil independence.

• Steve Yetiv is a professor of political Science at Old Dominion University in Norfolk, Va. His latest book is called "The Absence of Grand Strategy." Lowell Feld, an economist, worked for 17 years for the US Department of Energy.

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