“If something like we have seen in Egypt or Libya happens in Saudi Arabia, we’re talking about a catastrophic scenario that will bring a global economic meltdown.”
Talking to Gal Luft about security and the effect of oil on the global economy is not for the faint of heart. The executive director of the Washington-based think tank the Institute for the Analysis of Global Security spoke to The Jerusalem Post
on Wednesday during the fourth annual Eilat-Eilot Renewable Energy Conference, in a 45-minute conversation that described the petroleum tightrope on which the world’s economies are teetering.RELATED:Opinion: As Libyans die, a New Jersey town subsidizes Gaddafi
“The world needs to wake up to the fact that if a country like Saudi Arabia follows the same path we’ve seen in Egypt, Tunisia and Libya, it would be a very, very dangerous situation for every economy in the world – the rich and poor alike,” said Luft. “The first thing that will happen is, the poor people of the world will starve; there will be no oil to distribute food in places like Africa. Then all the world markets will collapse.”
He noted that “every single recession since World War I except for one has been preceded by an oil crisis. When there is an oil crisis, very shortly after, you see a major recession.
The reason that the situation now is so delicate is that we just had a recession. When you have a recession on top of a recession, it’s like a heart attack on a heart attack – you are too weak, you can’t handle it.”
According to Luft, “if we get another oil shock, it can roll back all of the economic recovery we’ve had. Then you will see millions of people losing their jobs around the world.”
To make matters worse, Luft said he didn’t believe that a hypothetical Western-led military intervention to secure Saudi Arabia’s oil fields would help matters.
“Let’s say the US sends the military to take over Saudi Arabia. The oil fields in Saudi Arabia are in the eastern, mostly Shi’ite province next to Iran, so the Iranians will start an intifada there. They’d blow up the fields, they’d blow up the pipelines, they’d boobytrap everything there and you’ll see a situation like Iraq or Afghanistan, just in the world’s richest oil province,” he said.
“These are very, very dangerous, catastrophic scenarios, so I don’t think sending the military over will make us any safer economically.
It’s very easy to take over an area militarily. It doesn’t mean you can maintain economic activity in the same place.”
If the world’s oil supply is threatened, security issues for Israel would only worsen, Luft added.
“The flipside is that [in such a scenario,] the very same countries
we’re trying to weaken, like Iran, would strengthen. What you would see
is a historic transfer of wealth from the world’s poorest people to the
world’s richest people. Because people in Africa will have to buy oil
for the same price that everybody else does; they don’t get a discount
for being poor.”
Luft, who is also the co-founder of the Set America Free Coalition – an
alliance of national security, environmental, labor and religious groups
promoting ways to reduce America’s dependence on foreign oil – said the
most crucial necessity was to break oil’s monopoly on the world’s
This, he said, could help end the current situation wherein we “base our
entire future and prosperity and way of life on a group of
dictatorships that might collapse in a matter of a few days.”
“The transportation sector, which underlies the global economy, runs on
oil. Your food, your clothes, everything is dependent on oil. We’re all
treading on very thin ice if we think about this, like a turkey before
Thanksgiving. Everything is good, you’re getting your food and you’re
happy, and then you wake up and it’s Thanksgiving and life gets very
Luft said the United States must pass laws that would require every new
car sold in America be a “flexible fuel” car, arguing that “if you’re
running out of oil, then it’s folly to continue to put cars on the road
that can only run on oil.”
Luft mentioned conclusions drawn in his book, Turning Oil into Salt: Energy Independence Through Fuel Choice
, which describes how salt went from being one of the world’s top commodities to just another resource.
“Salt used to be one of the world’s most prestigious commodities because
it had a monopoly on food refrigeration,” he explained. “Then we
invented canning, and later refrigeration, and that’s it, you no longer
needed to send soldiers to defend salt mines.
Salt became boring. Hopefully the same will happen with oil, making it just another commodity stripped of its strategic power.”