The Prize: The Epic Quest for Oil, Money, and Power

by Daniel Yergin

But as he pushed for further price increases, the Shah collided with his neighbors across the Gulf. The Saudis had never approved of the scale of the December 1973 price increase. They thought it was too large, and too dangerous to their own position. They feared the economic consequences. And they had been alarmed to find themselves losing control over OPEC and over the basic decisions about oil, which was so central to the kingdom’s existence and future. It was not in their interest to perpetuate the cycles of recession and inflation that would be stimulated by further increases in oil prices. Owing to the size of their oil reserves, the Saudis had a decisive stake in the long-term markets for oil, in contrast to Iran. The Saudis feared that higher prices, and the expectation thereof, could set off a move away from oil to conservation and to other fuel sources that would change and contract that long-term market for oil and thus diminish the value of their reserves. From those considerations flowed other concerns. Saudi Arabia was a country large in territory but small in population, not much bigger in terms of numbers than, for instance, the geographically minute Hong Kong. The rapid buildup of oil revenues could create social and political tensions, as well as dangerous expectations, weakening the ties that held the kingdom together. Nor did the Saudis want higher prices to interfere with, complicate, or undermine their objectives in the Arab-Israeli conflict. And they...