Energy Business

The Petroleum Price Problem: Guns For Oil

The balance of trade between the US and its Arab allies has taken several odd twists since the price oil began to move up sharply last year. The US buys oil at $125 a barrel. It has recently sold Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates about $20 billion in new weapons.

While some of this guns and ammo will be used to defend borders, a part of the planes, rifles, and explosives are quietly enlisted to keep militants from overthrowing the local kingdoms.

It has been eighteen years since Iraq invaded Kuwait. The US spent several billion dollars to push Saddam out. It was an expensive few days in the desert.

Iraq is no longer a threat to the kings and their courts, but Iran is. US carrier groups in the Gulf region are a display of commitment to keep sovereign states safe from the forces of evil. Batman in a battle group.

In exchange for protecting six nation states, all of which are targets of destabilizing parties who wish to see them out of power, the US gets no increase in oil production. Crude prices, which may be the largest inflationary force in the American economy, are not falling.

All of it may be a little unbalanced.

Douglas A. McIntyre