Oil and the Gulf War

Oil and the Gulf War Paul Aarts; Michael Renner Middle East Report, No. 171, The Day After. (Jul. - Aug., 1991), pp. 25-29+47. Stable URL: http://links.jstor.org/sici?sici=0899-2851%28199107%2F08%290%3A171%3C25%3AOATGW%3E2.0.CO%3B2-V Middle East Report is currently published by Middle East Research and Information Project. Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at http://www.jstor.org/about/terms.html. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at http://www.jstor.org/journals/merip.html. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is an independent not-for-profit organization dedicated to and preserving a digital archive of scholarly journals. For more information regarding JSTOR, please contact support@jstor.org. http://www.jstor.org Sat Feb 10 20:21:30 2007 Kuwaiti oil refineriesfunction as usual on the day before Iraq invaded. K. Shreeram/Impact Visuals N AND THE GULF WAR By Paul Aarts and Michael Renner Middle East Report July-August 1991 o Blood for Oil! The rallying cry of many of those who took to the streets in protest against the Gulf war is simple. Is it too simple? "Even a dolt understands the principle," said one unnamed US official, "We need the oil. It's nice to talk about standing up for freedom, but Kuwait and Saudi Arabia are not exactly democracies, and if their principal export were oranges, a mid-level State Department official would have issued a statement and we would have closed Washington down for August."' To be sure, no conflict is one-dimensional. Some in Washington welcomed the crisis to demonstrate that the US still has a clear advantage over its economic competitors: military power. The military has tested its new weapons under realistic conditions, and the political leadership is glad to bury the "Vietnam syndrome." The conflict also deflected attention from domestic difficulties with a rousing foreign adventure. Nevertheless, this war was about oil-access, prices and profits. US intervention needs to be seen against the background of an ongoing transformation of the world oil industry. Since the first signs, some 20 years ago, that the oil producing nations of the Third World might manage to assert greater Paul Aarts teaches international relations at the Uniuersity of Amsterdam, and is affiliated with Middle East Research Associates (MERA) in Amsterdam. Michael Renner is a Senior Researcher at the WorldwatchInstitute, Washington, DC 25 Loyal Producers control over the exploitation and pricing of their oil resources, the major international oil companies have shifted their capital spending and oil exploration efforts to the United States, the North Sea, and other politically safe non-OPEC areas. Some Western governments initiated programs to develop alternative energy sources. In the 1980s, the scales of power tipped away from OPEC. By 1985 OPEC's market share of global production was 30 percent, down from 54 percent in 1973. Its ability to influence prices was minimal.2 This strategy could not be sustained indefinitely. The growth of non-OPEC production has tapered off in recent years. The price crash of 1985-86proved to be a turning point of sorts. It forced greater cohesion on OPEC's members, and also made expensive non-OPEC production uneconomical. Non-OPEC output in the capitalist world, after peaking in 1985 with 44 percent of global production, declined to 39 percent last year (Table 1). OPEC's capacity utilization went A core of Gulf oil exporters is thus pivotal for the supply of oil to the world economy. This is a key reason for Washington's intervention in the Kuwait crisis. In addition to the increasing dependence of major consuming countries on the oil deposits in the area, important ideological and practical afinities between the Gulf monarchies and the West make that reliance tolerable. Faced with rising oil import dependence, the Bush administration has made a strategic decision in favor of shoring up its Gulf allies militarily even while opposing policies at home that would constrain the American appetite for enerm6 These countries-Saudi Arabia, Kuwait, and the United Arab Emirates-have by far the most extensive oil reserves in the world, rivaled only by Iraq and Iran, and the ability to expand production capacities to meet growing world demand. Table I. World Oil Production Table II. US Oil lmports 1973 1980 1985 1990 1973 *UnitedStates1 *WesternEurope *Gulf states2 17.4 23.6 26.3 22.2 (millionsof barrels per day) World Production 58.5 62.8 57.6 65.3 1US share includes naturalgas liquids. 2lncluding Oman, a non-OPEC state. Sources: Adapted from BP Statistical Review of World Energy (London: British Petroleum Co., July 1989); "OPEC 1990 Output Hits 10-Year High Despite War," PetroleumIntelligence Weekly, February 11, 1991, p. 9. up from around 50 percent in the mid-1980s to 90 percent in 1990. OPEC's share of the world oil market is expected to climb from a current 39 percent to around 50 percent by 1995.3 This turnaround reflects underlying realities: the OPEC countries worldwide possess 74 percent of the world's known oil reserves. Those in the Gulf account for 62 percent. The Gulf states' proven reserves grew from 398 billion barrels in 1985to 572 billion barrels in 1988,while those of much of the rest of the world barely stayed even, despite huge expenditures on expl~ration.~ This has been most pronounced in the US, still by far the world's largest consumer of oil. Domestic production, steady from 1975to 1985thanks to Alaskan oil fields, is now in steep decline.=As a result, imports are ballooning and their composition is changing. During the first half of the 1980s, supplies from Mexico and the North Sea displaced OPEC oil in the US. The Gulf producers now account for 28 percent of all US imports, up from 7 percent in 1985 (Table 2). 26 1985 1990' Total US Consumption Domestic Production Net Imports 17.0 11.0 6.0 Import Share 35.4 17.6 5.4 3.6 18.5 9.9 8.6 16.6 10.2 6.4 14.9 10.6 4.3 16.3 8.9 7.4 (percentof US consumption) OPEC Centrally-Planned Economies 1980 (millionsof barrels per day) (percentof worldwide production) Western Non-OPEC 1977 OPEC Imports Arab OPEC Imports Gulf Imports 46.4 33.5 17.2 10.3 38.4 25.9 15.4 9.1 28.7 12.3 3.2 1.9 45.5 27.8 14.6 12.7 (percentof net imports) Arab OPEC Imports Gulf Imports 15.2 10.2 37.2 22.2 40.1 23.7 11.O 6.6 32.1 27.9 1Averagefor first 10 months. Source: Calculated from US Energy Information Administration, Monthly Energy Review, August 1990 (Washington,DC: Department of Energy, 1990),Tables 3.1 and 3.3. They have an interest in maintaining relatively low oil prices to secure long-term markets for their resources, whereas the more populous OPEC countries-Nigeria, Indonesia, Algeria, Iran and, to a degree, Iraq-are hard pressed to finance an array of civilian and military needs and to pay off foreign debts. Higher revenues over a much shorter stretch of time are in their interest. Kuwait and Saudi Arabia both have invested a substantial part of their petrodollar surpluses in Western countries. Kuwaitis acquired controlling or minority holdings in a large number of companies, while Saudi Arabia primarily invested in bank deposits and government bonds and securities. Declining oil revenues have forced Saudi Arabia to draw down these deposits for much of the last decade. Today they are estimated at no more than $50-$60 billion, compared with a peak of $150 billion at the beginning of the 1 9 8 0 ~ . ~ In addition, Kuwait and Saudi Arabia (and, outside the Middle East, Venezuela) have acquired refineries, marketing Middle East Report July-August 1991 networks and other assets in the industrial markets.8 Structurally tied even more tightly to Western economies, they are unlikely to adopt production and pricing policies that might hurt the industrial economies. Kuwaiti income derived from foreign investments has exceeded the country's revenues from sales of crude oil and petroleum products in recent years.g Saudi Arabia has played a key role since the mid-1960s in keeping prices down. Riyadh opened the spigot in 1980 and 1981 to make up for lost supplies in the wake of the Iranian revolution and after the outbreak of the Iran-Iraq war, to force fellow OPEC members to toe the line on pricing in 1986, and again following Iraq's invasion of Kuwait to compensate for embargoed Iraqi and Kuwaiti crude.10 The trigger for Iraq's invasion of Kuwait was the emirate's production far in excess of its OPEC output quota. This weakened world oil prices and came at the direct expense of Iraq. If Iraq had been able to hold on to Kuwait, it conceivably Iraq's show of force in late July 1990 raises an interesting question. Was Washington happy to see Saddam Hussein "enforce" price discipline within OPEC? Baghdad's interest clearly lay in moving prices upward to the $22-25 per barrel range to fill its depleted treasury. As the colloquy between Saddam Hussein and April Glaspie indicated, this did not exceed what US oil interests wanted.12 The US is playing a highly ambivalent role in the oil game. As the preeminent power seeking to preserve the conditions for the global capitalist economy to thrive, it promotes the flow of oil at reasonable prices. Japan and Western Europe are much more dependent on oil imports than the US (92 and 65 percent, respectively, of their consumption is imported-59 percent of Japan's and 29 percent of Europe's comes from the Gulf). On the other hand, the US has an interest in oil prices that permit higher-cost domestic production to remain competitive, a point not lost on President Bush, who made a Table Ill. The Twenty Leading Oil Companies Ratios: Company l Country Oil Reserves Oil Production lraa ~uwait Iran Venezuela Sonatrach* Product Sales Prodl Ref. Prod1 Sales (thousandsof barrels per day) (bn bbls) INOC* KPC* NIOC* PDV* Refining Capacity 100.0 97.1 92.9 59.1 2,786 1,411 2,870 1,985 550 852 766 1.894 422 966 915 1,500 507 166 375 105 660 146 314 132 Algeria 9.2 1,221 475 472 257 259 Mobil US 3.2 761 2,111 2,595 36 29 ENI* Texaco Amoco Italy US US 2.8 2.7 2.7 432 833 811 740 1,525 1,055 898 2,381 1,222 58 55 77 48 35 66 Production, refining and marketingarms of state-owned companies presented as single entity, though technically separate units in some cases. 'State-owned companies."Partially state-owned (40 percent). Source: Adapted from "PIW Ranks the World's Top Oil Companies," PetroleumIntelligence Weekly, Special SupplementalIssue,January 7, 1991, p. 2. would have taken a portion of Kuwait's production off the market in order to bolster prices. But Baghdad would not have been in a position to withhold any significant chunk of production from world markets. Oil accounts for over 90 percent of Iraq's export revenues and 61 percent of GDP.11 Indeed, before the invasion, Baghdad was planning to expand its own production capacity considerably over the next five years. The supply of oil, at least in the short run, was plentiful. The longer-term implications of the Kuwait takeover, however, were less certain. fortune in Texas oi1.13 Recall the events surrounding the first oil crisis in the early 1970s: Kissinger and Nixon appeared to think that the United States could derive competitive advantages vis-A-vis the highly import-dependent Europeans and Japanese.14 In the past two decades, however, Japan in particular has adapted very well to higher oil import costs through improved energy efficiency and now uses less than half the energy the US does to generate a dollar of GNP. In addition, the weak dollar has dampened the impact of rising oil prices on Western Europe and Japan.16 The Bush administration was less concerned about any modest increase in the price of oil than about the prospect of What Price Oil? strong Iraqi influence over the oil policies of Saudi Arabia and The Bush administration's nonchalant attitude towards the other Gulf monarchies. The crisis once more underscored Middle East Report July-August 1991 27 Saudi Arabia's unique position: even the total boycott of Iraqi and Kuwaiti oil was of little consequence to the world economy as long as the Saudis boosted their output to compensate for the supply loss. Leaving Iraq in a position to influence the Gulf monarchies, though, might have jeopardized Riyadh's ability to moderate prices. The war against Iraq needs to be seen in the context of the shifting oil politics in the Gulf region. During the 19709, Iran under the shah protected the political status quo. When Khomeini's Iran turned against the West, the US moved closer to Iraq and shored up Baghdad's staying power in its war against Iran. When the war ended in 1988, the monarchies confronted a well-armed and economically hungry Iraq. Determined to maintain the existing political order in the Gulf, but now shorn of proxy forces, the United States felt compelled to intervene directly. Oil companies-some more than others-were clear win- than that of most other major firms. Oil production in Alaska, taxed at the comparatively low marginal rate of 34 percent, is a boon for B P and also for Arco, Unocal, and Amerada Hess. Companies that enjoy very high self-sufficiency rates include Amoco and the French firm, Elf-Aquitaine. The operations of other majors, including Royal Dutch/Shell, one of the largest, are subject to marginal tax rates as high as 64 percent.ls The second consideration relates to the "downstream" refineries and distribution networks. During the early 19809, rising crude oil prices depressed refinery profit margins, while falling crude prices allowed refiners greater margins. Because the Iraqi invasion led to the withdrawal of roughly 750,000 barrels per day (b/d) of petroleum products (and another 500,000 b/d of refinery output went to the allied forces in Saudi Arabia), refining profits have jumped.19 During the second oil crisis in 1979-80, US refineries used 74 percent of their capacity; now they are running at 92 percent. Those companies that are more strongly involved in refining than in distribution-Ultramar, Diamond Shamrock and Ashland Oil, for example-have reaped the greatest windfall. More Table IV. Control of Oil Reserves, specifically, those companies whose refineries are configured Production and Sales, 1989 to process the heavier Saudi crude that is replacing lighter Oil Reserves Oil Production Oil Product Sales Kuwaiti and Iraqi oil-Chevron, Shell, Unocal, and Amoco(bn bbls') ('I0) (m bid2) ('I0) (m bid2) (%) have (literally) a built-in advantage. Those sellingjet fuel-in Majors3 38.8 4.5 9.2 22.4 21.2 48.1 particular, companies supplying Saudi Arabia during the National Oil Companies4 799,0 93,1 26.9 65,7 ,9 27,0 war-fared much better than those selling gasoline.20The situation is less opportune for companies that market their All Other Companies5 20.1 2.3 4.9 11.9 10.9 24.8 ~roductsvia long-term supply contracts. TOTAL6 857.8 100.0 40.9 100.0 44.0 100.0 A third factor concerns the degree to which oil companies have invested in the petrochemical industry. overcapacities lBillions of barrels. 2hnillions of barrels per day, 3The "Seven Sisters8'minus Oil (acquired by Chevron) plus Amoco and Arco). 425 companies from major oil in this industry make it impossible to pass through higher producing nations. 532 companies,mostly smaller privatefirms but also some partially for the mostimportant petrochemical feedstock, naphor wholly state-owned enterprises whose operations are not primarily based on these difficulties. domestic oil reserve holdings. 6 ~ n c o m ~ a s s ethe s 65 leading companies outside tha. In the US, re~essioncompo~nds the Soviet Union and China. Totals may not add up due to rounding. With the obvious exceptions of Iraq and Kuwait, all oil Source: Calculated from "PIW Ranks the World's Top Oil Companies," Petroleum exporting countries have benefited from the upsurge in oil Intelligence Weekly, Special Supplemental Issue,January 7, 1991, p. 2. ners of the events following the Iraqi invasion of Kuwait. Robert Horton of British Petroleum commented that "every dollar increase in the price of a barrel of crude adds $200 million to my bottom line."l6 More important than the crude price itself are the price differentials between crude oil and oil products and between wholesale and retail markets. Thus oil companies reported more spectacular profits in the 4th quarter of 1990 and the 1st quarter of 1991, when crude prices declined gradually, than in the 3rd when they surged upwards.17 This may have been a one-time bonanza. When the war started in January, oil prices on the futures market dropped by $10,the largest-ever one-day decrease. When Iraq and Kuwait re-enter the market, the result may well be an oil glut, depressing prices. Three major factors determine corporate profits. The first concerns the extent to which a company is able to supply its refining facilities and marketing networks with its own crude production (see Table 3), and the degree to which it operates in low-tax areas. Some 54 percent of BP's net income stems from crude production, and its "self-sufficiency" rate is higher 28 prices since August 1990. The biggest gainers were Saudi Arabia, the United Arab Emirates, Libya, Gabon, and Venezuela: they were best able to respond by increasing their own production. Saudi Aramco went from 5.3 million b/d in July 1990 to 8.35 million b/d five months later. Production capacity is to rise to 10 million b/d in three ~ e a r s . 2 ~ Structural Aspects The nationalization of oil resources by OPEC governments in the 1970s led to a sharp drop of the crude oil availability for the international oil companies. "Vertical integration7'-the balance between upstream and downstream operations or, to put it differently, a corporation's control over sufficient quantities of crude oil production to supply its refining and marketing outlets-came to an abrupt end. The companies subsequently sought to replace lost reserves by exploring in a variety of non-OPEC countries and, during the mid-1980s, by acquiring other firms with proven reserves-"prospecting on Wall Street."22 But most still purchase substantial amounts of crude or refined oil, through contractual relationships or in the open market, to balance their operations. During the Middle East Report July-August 1991 1980s, the global oversupply of oil allowed the companies to put pressure on producer governments to lower prices and gradually to abandon them in favor of prices set in spot and futures markets.23 In the last few years, growing numbers of oil-producing countries have felt compelled by shortages of capital, skills or technology to invite exploration ventures by private oil companies after excluding them for decades. Nations that have already welcomed back foreign firms include the Soviet Union, China, Vietnam, Venezuela, and Algeria, and others in Eastern Europe. Together they represent one third of current world oil output. As the Petroleum Intelligence Weekly commented: "In the Middle East. . . a dramatic move away from resource nationalism is providing opportunities for oil companies to move back into that corner of the world." The international oil companies may thus find a new avenue toward vertical reintegration. Before its Kuwait adventure, cash-strapped Iraq was the first state in the Gulf region to invite international oil firms to develop known oil fields. 24 The Financial Times subsequently reported that "the crisis in the Gulf may force Kuwait to consider allowing foreign ownership of petroleum assets as a means of enhancing its future security. . . ."25 The national oil companies are facing the opposite situation: they control huge oil deposits but lack sufficient outlets. OPEC governments have tried to boost the share of their crude production that is sold in the form of products by constructing refineries and acquiring gasoline stations in Western Europe and North America. Kuwait Petroleum Corporation has been at the leading edge of this move downstream, followed by Venezuela's PDV and Saudi Aramco.26 Tables 3 and 4 portray the upstream/downstream disparities between state oil companies and private international companies. Both are trying to (re-)build vertically integrated structures, from opposite vantage points. It seems the world oil industry is entering a new era. In the absence of serious efforts to enhance energy efficiency and to develop renewable sources of energy, oil demand is set to grow; only the Gulf states seem able to satisfy that demand. With both sides Footnotes 1 Time, August 20, 1990. 2 See Michael Renner, "Restructuring the World Energy Industry," MERIP Reports, January 1984, pp. 12-17; and Michael Renner, "Stabilizing the World Oil Market," OPEC Review, Spring 1988, pp. 49-72. 3 Capacity utilization and expansion plans from "Capacity Plans Underscore Shifting OPEC Focus," Petroleum Intelligence Weekly (PIW), March 12, 1990, p. 7. Projected OPEC share from Frank Gesemann, "Schwarzes Gold: Der Konflikt um die Erdolreserven," Der herblick, No. 4 (1990),p. 28. 4 Reserve trends from BP Statistical Review of Energy (London: British Petroleum Co., July 19891,p. 3. During 1975-1982, three quarters of oil exploration money was expended in the Western industrial countries, with the United States receiving the lion's share, while only 3.4 percent went to the Middle East. Between 1973 and 1981,about 90 percent of worldwide exploratory wells were drilled in industrial countries, again most of them in the United States. See Renner, "Stabilizing the World Oil Market.". D. 51. . American December 1990. Institute, Monthly Statistical Report, 6 See Michael Renner, "Shaping America's Energy Future," World Policy Journal, Summer 1987, pp. 383-414, and "Hot Air on Global Warming," World Watch,PP. 35-36. The administration's vaunted new "energy strategy" will open up disputed Middle East Report July-August 1991 heavily investing capital and technology-the private firms in exploration and production in the oil-rich countries, and the state companies in refining and marketing in the major markets-both have an overriding interest in stable prices and stable politics as well. Edward Morse of Petroleum Intelligence Weekly presented the case for condominium recently, arguing that "it is no longer a case of 'us versus them.' It is now much more an issue of how differing endowments of geology,capital, technology and human resources complement one another."27 Iraq, by invading Kuwait, was moving to augment its endowments of geology and capital, and in the process to redefine the political relationships that have linked the OPEC producers, the companies, and the governments of the industrial consuming countries. Saudi Arabia identifies itself closely with the economic and political interests of the US and the major European states. But in "representing" these interests in OPEC and Arab politics, the Saudis have had to take account of the balance of forces in the region. It was this balance that Iraq attempted to restructure, and the US was determined to reimpose. The arrangements that will follow the US defeat of Iraq will likely produce a kind of joint "oil dominion" between major consumer countries and a core of oil exporters which will override the interests of the poorer oil importers and exporters alike. At the center of this new alignment will no longerhe the "seven sistersu-the major private companies that dominated the industry before the 1970s-but what South magazine has dubbed the "four stepsistersH-Saudi Aramco, PDV, and Exxon and Shell, the two largest private firms.28 But OPEC will have to confront some serious conflicts within its ranks which may well split the organization. Producers like Saudi Arabia, Iran and Venezuela are investing huge amounts of capital to expand their production capacity: will they be ready to scale back their market share once Iraq and Kuwait resume production?29 The new world order of oil could bring unprecedented producer-consumer cooperation for the privileged states and companies, and increasingly harder times for the rest. territories for exploration and remove obstacles to nuclear power plant construction. Energy policy alternatives are explored by Christopher Flavin, "Conquering US Oil Dependence," World Watch, Januarypebruary 1991, pp. 28-35. 7 Zakaria A. Basha, "The Impact of Economic Development of the 1980s on Arab Investment Abroad," Journal of Arab Affairs, Vol. 8, No. 2, pp. 191.206; Financial Times (IT'), February 15, 1991; Michael Field, "Saudi Arabia: Vanishing Bonanza, New Opportunities and Adaptive Conservatism," Vierteljahresberichte, September 1989, pp. 267-272. 8 See Paul W.H. Aarts and Gep Eisenloeffel, "Kuwait Petroleum and the Process of Vertical Integration," OPEC Review, Summer 1990, pp. 203-222. 9 Gesemann, "Schwarzes Gold," op. cit., p. 28. 10 See Michael Renner, "Determinants of the Islamic Republic's Oil Policies: Iranian Revenue Needs, the Gulf War, and the Transformation of the World Oil Market," in Amirahmadi and Parvin, eds., Post-Revolutionary Iran (Boulder, CO: Westview Press, 1988),pp. 183-209. 11 Peter D. Carlin, "Iraq's New War," Petroleum Economist, September 1990, P. 5. petroleum Outlook (November 1990, PP. 8.121 called Hussein Entrepreneurial who, with his takeover of roughly billion barrels of Kuwaiti oil, made corporate acquisitions like that of Gulf Oil by Chevron in 1984 look like child's play. 12 on~~l~ 27,1990, just before the takeover o f ~ u w a i t , intimidation tactics led OPEC to raise its target price from ~~~~l~ to $21 per barrel. US Ambassador April Glaspie reportedly told Saddam Hussein on July 25 that "We have many Americans who would like to see the price [of oil per barrel] go above $25 because they come from oil-producing states." See "The Quiet Campaign to Export Alaska's Oil," Earth Island Journal, Fall 1990, p.9. An October 21, 1990, article in the Observer (London) speculated that Saddam Hussein's and Bush's interests overlapped a t least partially. 13 When oil prices collapsed in 1986, then-Vice President Bush urged the Saudi government to stabilize prices. 14 For 1970s' speculation, see V.H. Oppenheimer, "Why Oil Prices Go Up-The Past: We Pushed Them," Foreign Pol~cy, Winter 1976-77, pp. 24-57. 15 The monthly average of oil prices rose from $12.90 in June 1990 to $35.32 in September. Adjusting for inflation and exchange rate variations, however, Japan paid only $32.49 and Germany $33.71. By November, the United States paid $28.65 for a barrel of imported oil, but at $24.75 and $25.96, respectively, Japan and Germany still paid less. See "Falling Dollar Takes Sting Out of Oil Price Spike," PIW, December 10,1990, p. 5. 16 Derek Bamber, "Profit Surge on the Way?: Petroleum Economist, September 1990, P. 23. Prices remained high until ~~,"f,"1l~~2,"~r,"~t~,"b,"," compensated by October 1990. See "OPEC 1990 Output Hits See Aarts, page 47 29 Amnesty International, Bahrain: Violations of Human Rights (New York and London, May 1991). Article 19, Sudan: Press Freedom Under Siege (London: Article 19, International Centre Against Censorship, April 1991). T h e Association o f Israeli-Palestinian Physicians for Human Rights, Activities Report, January-February 1991 and Annual Report, 1990 (Tel Aviv, 1991). Reuven Avi-Ran, The Syrian Involvement i n Lebanon Since 1975 (Boulder: Westview Press, 1991). $32.00. Nazih N. Ayubi, Political Islam: Religion and Politics i n the Arab World (New York: Routledge, 1991). $59.95. Tahar Ben Jelloun, Silent Day i n Tangier [novel],translated b y David Lobdell (New York: Harcourt Brace Jovanovich, 1991),$17.95. B'tselem, Information Sheet (September-October 1990, November 1990, January-February 1991) (Jerusalem:T h e Israeli Information Center for Human Rights i n the Occupied Territories, 1990-91). B'tselem, The Interrogation of Palestinians During the Intifada: Illtreatment, "Moderate Physical Pressure" or Torture? (Jerusalem: T h e Israeli Information Center for Human Rights i n the Occupied Territories, March 1991). Greg Bates, Mobilizing Democracy: Changing the U S Role i n the Middle East (Monroe, ME: Common Courage Press, 1991). $12.95. Ian Black and Benny Morris, Israel's Secret Wars: T h e Untold History of Israeli Intelligence (New York: Grove Weidenfeld, 1991). $24.95. Rex Brynen, ed., Echoes of the Intifada: Regional Repercussions of the Palestinian-Israeli Conflict (Boulder, CO: Westview Press, 1991). $36.50. W . Seth Carus, The Poor Man's Atomic Bomb: Biological Weapons i n the ~ i d d l eE ast, Policy Paper NO. 23 (Washington, DC: Washington Institute for Near East Policy, 1991). Center for Policy Analysis on Palestine, The Palestinians after the Gulf War: The Critical Questions (Washington,DC, 1991). Mark R. Cohen and Abraham L. Udovitch, eds., Jews Among Arabs: Contacts and Boundaries (Princeton: Darwin Press, 1989). $14.95. Roderic H. Davison, Essays in Ottoman and Turkish History, 1774-1923: T h e Impact of the West (Austin:University o f Texas Press, 1990). $40.00. Erik Denters and Jacqueline Klijn, eds., Dynamics of Self-Determination: Economic Aspects of a Political Settlement i n the Middle East (Proceedings o f a Seminar, Nijmegen, April 18-21,1990. Distributed b y NOVIB, Amaliastraat 7,2514 JC den Haag, T h e Netherlands). Thomas C . Fox, Iraq: Military Victory, Moral Defeat (Kansas City, MO: Sheed & Ward's, 1991). $9.95. Aarts, from page 29 10-Year High Despite War," PIW, February 11, 1991, p. 9. 17 From August to October 1990, US gasoline retail prices lagged behind the steep rise in wholesale prices. By midOctober, they caught up and remained high for the remainder of the year, even while wholesale costs dropped back to what they had been a t the beginning of August. See Matthew Wald, "The Price a t the Pump: Quick Rise, Slow Fall," New York Times ( N Y T ) , January 1, 1991. Gasoline retail prices rose between 50 and 64 cents in Western Europe and Japan, compared with only 26 cents in the United States. See Matthew Wald, "New Jump in Gasoline Price Feared," N Y T , October 19, 1990. 18 Company reports from An-Nahar Arab Report & Memo, November 23, 1990; The Economist, September 8, 1990, and January 12, 1991; NRC Handelsblad (Rotterdam), September 29,1990, October 24,1990, November 9,1990, and January 19, 1991; The Guardian (London), January 15, 1991; Fortune, September 10, 1990; FT, August 25-26, 1990, November 9, 1990, January 24, 1991, and February 1, 1991; Le Monde, January 30, 1991; Business Week, January 14, 1991; N Y T , February 3, 1991. 19 The embargoed Iraqi and Kuwaiti crude oil is being replaced with heavier crude oil, but with the loss of sophisticated Middle East Report July-August 1991 Joseph Gerson and Bruce Birchard, eds., T h e S u n Never Sets. . . Confronting the Network of Foreign U S Military Bases (Boston, MA: South End Press, with the American Friends Service Committee, 1991). $16.00. Douglas F. Graham, Saudi Arabia Unveiled (Dubuque: KendallIHunt Publishing Co., 1991), Peter L. Hahn, The United States, Great Britain, and Egypt, 1945-1956: Strategy and Diplomacy i n the Early Cold War (Chapel Hill: University o f North Carolina Press, 1991). $37.50. Efraim Karsh, Soviet Policy towards Syria since 1970 (New York: St. Press, 1991). Samir al-Khalil, The Monument: Art, Vulgarity, and Responsibility i n ( ~ ~ university ~ k ~ lo f california ~ ~ : press, 1991). $35.00; $16.95. Philip S. Khoury and Joseph Kostiner, eds., Tribes and State Formation ~ k ~ lo f california ~ ~ : press, 1991). in the ~ i d dE~~ l ~ ( ~ ~ university $45.00; $14.95. Bernard Lewis, The Political Language of Islam (Chicago:T h e University o f Chicago Press, 1991). $9.95. Maison de l'orient, Batisseurs et Bureaucrates:Ingi.nieurs et Societi. au Maghreb et au Moyen-Orient (Lyon, France: Maison de 1'0rient Mediterraneen, Table-Ronde C N R S tenue B Lyon du 16 au 19 mars 1989 sous la direction d'Elisabeth Longuenesse), Fatima Mernissi, Doing Daily Battle: Interviews with Moroccan Women ( N ~ ~ ~~ ~R~~~~~~ ~ university ~ i press, ~ 1989). k $32.00; : $12.00, Middle East Studies Association/Middle East Outreach Council, Text ~ ~study o f ~ i d d El ~l ~ ~ i, ~~ ~ ~ f~coverage ~ ~~ in 6th-12th Grade Textbooks (Ann Arbor, M I : Center for .Middle Eastern and North African Studies, March 1991). $20.00. ~ i d d ~~~t l ~ watch, prison conditions in ~~~~~land the occupied Territories (New York and Washington: Human Rights Watch, 1991). $8.00. ~ ~ ~ state ~ bin the , ~ ~ l ~~~b ~ h a l H~~~~ d ~ ~~ ~ l - ~society f Peninsula: A Different Perspective (London and New York: Routledge and Centre for Arab u n i t y studies, 1991). $78.00. Jamal R. Nassar, The Palestine Liberation Organization: From Armed Struggle to the Declaration of Independence ( ~ e ~wo r k praeger : l g g l )$42.95. . Ibrahim Oweiss, ed., T h e Political Economy of Contemporary Egypt (Washington,DC: Georgetown University Center for Contemporary Arab Studies, 1990), $21,00;$ll.OO, Nira Reiss, T h e Health Care of the Arabs i n Israel (Boulder: Westview Press, 1991). $29.95. James Ridgeway, ed., The March to War: From Day One to War's End and Beyond (New York: Four Walls Eight Windows, 1991). $9.95. Kuwaiti refining equipment the industry has encountered some difficulty producing enough of the lighter products, including military-purpose fuels, that are most in demand. Steven Butler, "Cool Nerves in a Crisis," Financial Times World 011 Industry Suruey, November 12, 1990. 20 In the United States, crude oil prices rose by 53 percent between August and October 1990.Jet fuel prices increased by 78 percent, heating oil by 45 percent, but gasoline only by 28 percent. See Matthew Wald, "Why Some Oil Prices Rise While Others Rise Faster," N Y T , November 4, 1990. 2 1 PIW, January 21,1991, p. 5, and February 11,1991, p. 9. 22 Oil reserve acquisition spending by the world's eight largest private oil companies soared from $1.3 billion in 1986 to more than $16.5 billion in 1988, nearly equaling outlays for exploration and development (E&D). In 1989, trends reversed, with $6.5 billion spent on reserve acquisition and $18.9 billion on E&D. PIW, July 16, 1990, pp. 1-2. 23 Renner, "Restructuring.. . " and "Stabilizing. . . 25 FT, August 30,1990. 26 In 1989, KPC's share of the retail oil products market in Britain, Italy, and the Benelux countries was about five percent. About 2 million b/d of OPEC oil-roughly 10 percent of the organizations's oil output-is now estimated to move through vertically integrated channels controlled by the producer governments. Aarta and Eisenloeffel, "Kuwait Petroleum Corporation and the Process of Vertical Integration." 27 This re-integration process would appear to confirm predic- tions spelled out in the early 1980s by Giacomo Luciani, The Oil Companies and the Arab World (London: Croom Helm and New York: St. Martin's Press, 1984). Edward L. Morse, "The Coming Oil Revolution," Foreign Affairs,Winter 1990-1991,p. 49. 28 Judith Vida-Hall, "The Four Stepsisters," South, July 1988, pp. 9-12. 29 Venezuela has already raised its production capacity to 2.8 " 24 "Shift Back to Exploration Highlights Hot Spots," PIW, Special Supplement Issue, July 16, 1990, p. 1. Exploration and production budgets of the leading international oil companies are to rise strongly to $52.1 billion in 1991 (PIW, January 7, 1991, p. 2). million b/d and is planning to go to 3.3 million b/d by 1996, a move estimated to cost $12 billion. Venezuela is known to consider leaving OPEC. Iran has announced plans to increase its capacity by 50 percent to 5 million bid. See Wald, "Assessing the Damage to OPEC," op. cit. 47 N~i