One of the biggest stories of 2004 was Peak Oil--the hardening consensus among analysts that global reserves of recoverable oil are half gone, and that output will soon begin a decline as drastic as last century's growth was explosive. Even if the 50 percent mark hasn't been reached yet, few disagree that the roller coaster car is at most inches from the big rush down.
All of which makes the current pipeline-terrorism fad more than a little ironic. Just as it becomes clear that the earth's juiciest sunken oil veins are collapsing, along comes Johnny Jihad to smack the needle out of our fingers. Turns out we may not get the honor of sucking the world's last oil well dry, after all.
During the first three weeks of 2005, there were 13 reported attacks on Iraq's oil infrastructure, bringing the total since the start of the war to almost 200. Though one-third of Iraq's security forces and some 14,000 mercenaries now patrol Iraqi refineries and pipelines, the attacks are grinding exports to a slow halt. The State Department admits that the Iraqi oil industry is operating at half-capacity and falling, confirming Paul Wolfowitz's pre-war claim that oil profits would finance reconstruction as one of the best jokes of 2003.
The effects of these attacks haven't been limited to Iraq, of course. Oil analysts estimate that around $10 of the current cost of a barrel of crude reflects a risk premium that is a direct result of the oil infrastructure raids in Iraq. Basra bombs; Japanese jitters.
"This is a new situation," says Gal Luft of the Institute of the Analysis for Global Security in Rockville, MD. "What has changed in the last year or so is that, because of the rise of China and India, the world oil market lacks liquidity and spare capacity, so any attacks on supply, any barrel of oil removed from market due to sabotage, immediately effects the market prices."
"There is a clear understanding [on the part of Islamist groups] that if you want to hit America or the West, you go after oil, which is right in their backyard," says Luft. "They don't have to go all the way to New York and deal with the INS and FBI."
That the pipeline attacks have undermined more than just the U.S. occupation in Iraq was recognized by Osama bin Laden in an audiotape released last month. In the tape, dated Dec. 16, bin Laden called upon his followers to "focus your operations on the oil, especially in Iraq and in the Gulf, as this would mean [the West's] death."
Within 24 hours of the tape's release, five attacks were carried out on Iraqi oil facilities, with similar attacks reported in Pakistan, Sudan and Nigeria. Jihadist message boards lit up in enthusiastic agreement with the call to go for the oil jugular.
"O horses of Allah, go for a ride," reads one post translated by the Washington-based SITE Institute. "There is nothing that terrifies the Infidels more than attacking the oil sources."
Another post noted: "A small operation on an oil tanker will make the Infidels of London, Paris, Washington and Tel Aviv shake with fear."
About this, these anonymous mujahadeen are absolutely correct. A growing number of leading Infidels are admitting chills at the prospect that the kind of oil infrastructure attacks now seen in Iraq will begin occurring in the Gulf. Should this happen, some predict the effect would be huge--an economic "sum of all fears."
"A handful of small attacks made against Saudi infrastructure will push oil well over $100 a barrel," says John Robb, an independent analyst and author of the forthcoming book Global Guerrillas. "Twenty or so a month will keep it there. We are about to see the rise of a shadow OPEC. The control of oil doesn't rest in the hands of the governments. It is in the hands of the guerrillas that can stop the flow."
Stopping this flow is easier than many think. More than half of Saudi oil reserves are found in just eight fields; two-thirds of all Saudi crude is processed at a single mega-facility in Abqaiq, near the Gulf of Bahrain. From here, the oil is shipped through two primary terminals. The larger of the two, Ras Tanura, processes a tenth of the world's oil supply daily; the other, Yanbu, is connected to Abqaiq by an unprotected 750-mile umbilical pipeline. Were a terrorist cell to hijack a few planes in Kuwait and crash them into these facilities--soft targets all--it could take up to 50 percent of Saudi oil off the market for at least six months and with it most of the world's spare capacity, sending oil prices through the ceiling, predicts Gal Luft.
"The nature of the Saudi oil industry is like our airport system," says Luft. "If you take out one of the major hubs processing three to five million barrels a day, you send oil prices to an unprecedented level. Even taking one million barrels off the market would be catastrophic."
Meanwhile, Saudi assurances about the security of their facilities get emptier by the day. Al Qaeda attacks in the Kingdom have been on the rise since the invasion of Iraq, beginning with a series of May 2003 Riyadh bombings and continuing with last month's daring attack on the U.S. Consulate compound in Jeddah. All signs point to major attempts on Saudi oil infrastructure sooner rather than later.
Even if it were possible to secure the world's major processing and shipping facilities, there is no way to secure the tens of thousands of miles of aboveground pipelines that traverse every major oil producing country, from the Gulf states to Uzbekistan to Nigeria. The aortic imagery often found in jihadist communiqués about oil--"The artery of the life of the crusader's nation!"--is both a strategic insight for jihad and a physical description of oil's role in the global economy. If the Saudi mega-refinery in Abqaiq is a giant exposed beating heart, then the world's pipelines are vast networks of soft, external veins, easily sliced with the military equivalent of a razor from the local pharmacy.
"Systems sabotage is amazingly effective," says analyst John Robb. "Small attacks that cost less than $2,000 have caused billions in damages--a return on investment of 100,000 times. Most 'inside the beltway' analysts don't understand systems theory. So they focus on large scale attacks on major facilities, but these aren't necessary. As we have seen in Iraq, protecting major facilities doesn't matter if you sever the connections between them."
As it happens, the solution to the emerging sabotage threat is the same as the solution to Peak Oil: move the world economy away from dependence on oil as quickly as humanly possible. To do this, nothing less than a global Manhattan Project is needed, led by the United States and Europe in concert.
This radical view is becoming less radical within the national security establishment. This September, a cluster of conservative foreign policy think tanks put forth a document named "Set America Free," calling for increased fuel-efficiency and the rapid development of renewable energy. At a press conference later this week in Washington, the original signatories--including the Hudson Institute, the Center for Security Policy and the Foundation for Defense of Democracy--will be joined by the Natural Resources Defense Council, the nation's largest environmental group. This Green-Hawk alliance is just the latest manifestation of spreading anxiety over the ticking clocks of depletion and sabotage. One way or the other, the Age of Oil is coming to an end. The only question is what we're going to do about it.