Convenient Bad Guy of the Week: Saudi Arabia

The Biden administration and its many friends in Congress talk of “retaliation” against Saudi Arabia. But is an exhausted American imperium really in a position to throw around such lazy language?

Washington is almost paralyzed until the midterm elections.  Congress is in recess, but that hasn’t stopped a cluster of Democratic party legislators from “retaliating” against Saudi Arabia for OPEC’s decision to cut oil production before the elections.  Thus writes Al Monitor:

Senate Foreign Relations Chairman Sen. Bob Menendez (D-N.J.), whose committee has preliminary review of foreign arms deals, called for the United States to "immediately freeze all aspects” of cooperation with Saudi Arabia. Menendez said he wouldn’t “greenlight” cooperation until Riyadh “reassesses its position with respect to the war in Ukraine.”

Senator Richard Blumenthal (D-Conn.) and Rep. Ro Khanna (D-Calif.) introduced legislation Tuesday that would halt all arms sales to Saudi Arabia for one year. In a press conference Wednesday, Blumenthal said it was possible the legislation could be added to the must-pass National Defense Authorization Act or omnibus government funding bill.

Other legislative responses include a bill from Reps. Tom Malinowski (D-NJ), Sean Casten (D-Ill.) and Susan Wild (D-Pa.) that would mandate the removal of US troops and missile defense systems from Saudi Arabia and the United Arab Emirates within 90 days.  

Few Republicans have voiced support for such retaliatory measures. 

Note the imperious language of “retaliation”.

Note also the schizophrenic attitude of the Biden administration to oil production and fossil fuels more generally.  The administration and its allies have worked hard to keep their promises to hobble the production and use of fossil fuels in the United States.  They’ve shut down pipelines and have frustrated the expansion of oil refining capacity.  Meanwhile, they have been channeling $billions to ostensibly “green” energy projects.  But then prices for crude oil climbed sharply.  The administration might not perceive that as a problem per se.  Indeed, if stopping oil production is a good thing, then shouldn’t the administration approve of OPEC’s production cuts?

The problem, of course, is electoral politics.  Rising oil prices might not make for an immediate concern, but the electorate might take note of rising prices for distillates—specifically for gasoline.  The administration fears that “higher prices at the pump” will jeopardize success in the midterm elections.

The administration, of course, had come up with a “messaging” strategy for dealing with rising gasoline prices.  Prices started to rise sharply months before the Russian invasion of Ukraine in February of this year.  The strategy had been to suggest that the “transition” to Eco-green Nirvana—to an energy infrastructure that is free of both fossil fuels and nuclear energy—could prove to be a little painful.  So, why not go ahead and buy an EV (electric vehicle) now in order to spare oneself the burden of having to pay “higher prices at the pump?”  At the same time, the administration could blame Big Oil for high prices.  Somehow oil companies must be colluding to raise prices.  And, yet, how do we explain price declines when prices decline?  Easy: The administration made great efforts to bring prices down. (How?)  Prices came down.  So, the strategy is obvious: When prices go up, blame oil companies.  When prices go down, claim undeserved credit.

The invasion afforded a new (old) excuse: Blame Putin.  “Putin’s Price Hike!”

The events of this week reveal a new (old) Bad Guy: Saudi Arabia.  Saudi Arabia and Russia are the two biggest names in “OPEC+”.  OPEC+ is comprised of the OPEC countries plus a host of other countries including Russia and Mexico.  Depending on what newspaper one reads, one might understand that OPEC+ accounts for something between 30% and 50% of global oil production.

This last week OPEC+ committed to cutting production by two million barrels a day.  There is some suggestion out there that the administration had asked Saudi Arabia to forestall the production cut until after the midterm elections.  But, even so, would a production cut on the part of OPEC+ really have an important effect on oil prices and, ultimately, on gasoline prices? Is a cut of two million barrels a lot? Further, would other producers not make up the difference?

One should ask, because non-OPEC+ oil producers get a chance to weigh in.  One party’s production cut may induce other parties to maintain production higher than they otherwise would have maintained.  The simplest economic theory would suggest that other parties’ production increases would not entirely make up other parties’ production cuts, but that same theory suggests that there really is strategic interdependence of parties’ production choices.  Collectively, those choices soften the effect of any of OPEC+’s decisions.  Running a cartel can be tricky.

That said, there is a general impression out there that the OPEC+ production cut makes it easier for Russia to finance its continuing less-than-excellent adventure in Ukraine.  Is that what has gotten the administration all worked up?

So, now the administration talks up retaliation.  It seems like only a few weekends ago that the Saudis were Bad Guys, because the Trump administration had the appearance of getting along with them.  But then they reverted to not-so-bad-guys after Biden went to Saudi Arabia to fist bump the Crown Prince.  But this week the Saudis revert to straight-up Bad Guys again. 

Being friends with the administration is hard.  (Indeed, over the last few weeks I’ve seen many citations of that passage attributed to Henry Kissinger: "To be an enemy of the US is dangerous, but to be a friend is fatal.") But, will this episode provide more evidence that an exhausted American imperium is exhausted and is really not in much of a position to lazily toss around the language of “retaliation?”

Were that the only language that the administration has been tossing around. It now talks blithely of nuclear “Armageddon”. Are there no adults anywhere? And, if there are no adults, are there no old school peaceniks? “Make Love, not War!” Right?