Tearing up all previous contracts, Libyan dictator Gaddaffi grabbed 51% of all holdings of foreign oil companies, mostly American. In a new record of insolence, he decreed that all employees of the companies, regardless of nationality, shall continue to perform their duties under pain of fines and imprisonment. In a manner of speaking, this was generous, for the Koran punching dictator has reinstated the mediaeval punishment of amputating hands for petty crimes.

After a toothless protest by the US State Department, Gaddaffi's foreign minister Jallud flayed the US for intervention in Libyan domestic affairs, also charging that the US energy crisis is a prefabrication and "imperialist deception" to justify future armed intervention.

Four companies acquiesced to the take over and were generously allowed to buy back 51% of their own oil production at $4.90/bbl (but not in dollars, only in currencies convertible to gold); after 6 months, the price is to be raised to $6/bbl. Eight other companies refused to recognize the grab, mainly because they feared setting a precedent for further take overs in the Persian Gulf, where Saudi Arabia's oil minister declared all agreed on prices as "dead or dying and in need of extensive revision." Attempts to organize a coordinated boycott of Libyan oil got nowhere for lack of cooperation among Libya's oil thirsty customers. Exxon, with 165 US citizens on its Libyan payroll, Mobil with 96, and the other six protesting companies were taking some token action, such as reportedly preparing to sue European buyers of Libyan oil as illegal receivers of seized oil.

Libya supplies less than 3% of US oil imports, but unlike other Middle East oil, Libyan oil is low in sulfur content, and therefore in high demand to satisfy the Clean Air Act requirements.

Perhaps even more worrisome, Saudi Arabia's King Feisal, hitherto regarded as a US supporter, joined ranks with Arab radicals in demanding a US policy change toward Israel, strongly hinting that otherwise oil supplies would be cut off. The threat is not empty, for Saudi Arabia is amassing gold and currency in staggering amounts, and at a rate that is $100 million a month faster than it can spend them. President Nixon quickly reacted to Feisal's threat by conspicuously muting support for Israel in his press conference of September 5. His warning that there are limits to how far the Arabs can push the US and that "oil without a market doesn't do a country much good" was evidently only for home consumption, for the Arabs will laugh it off, and with good reason. Europe and Japan will take all they can get, and the Arabs have no incentives to increase production. The gold they are hording is of little more use than oil; their no.1 priority is that of every dictator — arms.

Canada, too, denied all October applications to export crude oil to the US in a surprise move mainly intended to reduce its eastern provinces' dependence on imported crude, and only secondarily to stem inflation by substantially raising export fees. Canada has hitherto exported almost 1.4 million barrels/day to the US. The other traditional overseas suppliers cannot keep up with US oil demand. Venezuela's oil produc tion is declining, and refineries in the Dutch West Indies are working at capacity. Meanwhile, Middle East imports have risen to 1.2 million barrels a day, triple the 1972 rate.

Returning to Gaddaffi's insolence, it is, on second thoughts, debatable whether he holds the record. Last month, Ralph Nader was asked for an appointment by Atomic Energy Commission head William Doub. 3 a.m. was the only available time, replied Nader the phony crusader.

Vol. 1, No. 2 Newsletter: Access to Energy Newsletter Archive Volume: Volume 1 Issue/No.: Vol. 1, No. 2 Date: October 01, 1973 04:59 PM Title: Bottleneck or "bottom of the barrel"? Copyright © 2004 - Access to Energy Newsletter Archive All rights reserved.