``I told you so.'' That, in effect, was the message delivered by Ahmad Zaki Yamani, Saudi Arabia's oil minister, at Harvard University's 350th anniversary party last week.
After the Iranian revolution, the Organization of Petroleum Exporting Countries (OPEC) boosted the price of oil dramatically; it reached $34 a barrel by 1980.
At that time, Sheikh Yamani recalled, Saudi Arabia produced 10 million barrels a day in an effort to restrain prices. This, he admitted, annoyed other members of OPEC. But ``that was the only weapon we had to reduce their appetite for higher prices.''
Today's weak oil prices and crude oversupply prove those high prices were a mistake, Yamani argued.
``We recognized too late that oil was overpriced, that it had reached an unwarrantably high level, destroying the state of virtual equilibrium between supply and demand that had prevailed for so long,'' he said. ``Unfortunately, we were lonely inside of OPEC at this time.''
Yamani offered some calculations on the economic results for OPEC, had it been more moderate during the second so-called ``oil shock.'' They showed that OPEC would have been just as well off on average over the long term.
If OPEC had kept the price at $23.80 a barrel through 1992, its members would have received oil revenue over this entire period equivalent to that actually earned in the period 1980-85, together with an estimated amount to be earned over the period 1986-92, should the average price be $18 a barrel. That future period assumes that the price of oil, starting at around $14 a barrel this year, will rise by around $1 a barrel per year through 1992, thereby reaching $20.
His calculation assumes that the demand for OPEC oil will rise from 14.9 million barrels per day in 1986 to 20 million in 1992 -- at which time OPEC revenue will reach $146 billion, roughly the same as was earned in 1984.
Further, if OPEC had frozen the price at $23.80 a barrel, then world demand would have declined modestly, to about 48 or 49 million b.p.d. from its 1979 peak of 51 million, Yamani reckoned. Instead it plummeted to 45 million b.p.d. in the early 1980s. Furthermore, non-OPEC supplies would have reached a maximum level of 1 million or 2 million b.p.d. less than the 1985 peak of 23 million barrels.
In a question period, Yamani stated that some other members of OPEC ``will become so angry if they read what I have said here.''
Noting the harm done to the economies of both petroleum producer and consumer nations by the ups and downs of oil prices, Yamani called for both OPEC and non-OPEC producers to ``cooperate in aiming at the establishment of a price structure which takes into account the economies of equilibrium between supply and demand.''
The oil minister also warned the United States that if it imposed import restrictions on oil, it ``could constitute an invitation to producers to raise prices again, to restore them to their former levels.''
In an aside from his text, Yamani noted that that might be done ``no matter what the sacrifice might be.''