Jamal Khashoggi Murder Highlights U.S. Dependence on Saudi Oil

| Aaron Pawlinski | December 10th, 2018 |

On October 2nd, 2018, Saudi-born journalist and U.S. resident Jamal Khashoggi was murdered in a consulate in Istanbul by Saudi officials. His death was the supposed result of years of criticism against his home country’s Crown Prince and King. Although Crown Prince Mohammad bin Salman has not officially confessed, a report issued by the CIA concluded he is responsible. The outrage against Khashoggi’s death has not extended itself to many sanctions by the United States, in part, because of our oil dependence. This deliberate silencing of speech freedoms is not an anomaly. The book Hot, Flat, and Crowded by Thomas Friedman highlights that Saudi oil money is being used to silence democratic movements. This extremism has been uniquely tolerated by the U.S. due to “petro-politics,” a phrase coined in the book (Friedman, p. 113).

Petro-politics refers to the shift of geopolitical power to oil exporting states from traditional world powers. The ability of the United States to curb autocracy is jeopardized by our reliance on oil. Furthermore, there is a unique correlation between autocracy and countries whose economies rely directly on oil. Dubbed “petrolist states” these countries include Iran, Russia, Saudi Arabia, Venezuela, and more. Only countries who already had well-established states before they became oil rich were immune to an influx of autocracy. These include the United States, Norway, Denmark, and Great Britain. Metrics to measure autocracy track indicators such as the credibility of legal systems, electoral processes, and trade freedoms (Friedman, p. 129). Expanding on these metrics, UCLA political scientist Michael L. Ross argues that “oil revenues relieve social pressures of greater accountability.” Ross also argues that oil money is used to “choke democratic movements” by “preventing the formation of social movements that are independent from the state” (Ross, 2011). In essence, these politics do not originate from becoming oil flush; however, such a resource curse encourages authoritative tendencies that were already there. Oil foots the bill for bad government.

The inter-dependence is as follows: 9% of the U.S. petroleum imports come from Saudi Arabia. (“How much petroleum does the United States import and export?”, 2018). 15% of Saudi Arabia’s crude petroleum exports go to the U.S. (“Export Destinations of Crude Petroleum from Saudi Arabia”, 2016). Saudis are also investing in the U.S. The Saudi Sovereign Wealth fund has large holdings in the Blackstone Group and Uber, both American companies. The result of which are two interconnected countries with different views regarding the freedoms of journalists. For the U.S. to threaten relations would also threaten its imports of an extremely inelastic good. The United States economy would suffer from such a shock.

In 1973, OPEC targeted an oil embargo at the United States which caused the price of oil to nearly quadruple, partially causing a recession. With Saudis being the largest exporter in OPEC, they have significant leverage over production levels and thus prices. The U.S. would find it difficult to substitute to other producers quick enough to mitigate the effects of a dramatic price hike. A candidate for substitution is Venezuela; however, their current economic crisis has significantly crippled oil output. Another candidate is Canada but they’re already the United States largest supplier.

When so much of the United States’ energy is based on oil and so much of that oil is sold by one producer, diplomatic leniency appears. This leniency was even directly acknowledged by President Trump. A report released by CNN on November 20th included the following, “Speaking to the press later in the day, Trump cited the Kingdom’s influence over oil prices and said, ‘if we abandon Saudi it would be a terrible mistake.’ He also said he was ‘not going to destroy the economy of our country” (Gaouette & Collins, 2018). A response later issued by the Washington Post, the publication associated with Khashoggi, stated, “He is placing personal relationships and commercial interests above American interests in his desire to continue to do business as usual with the Crown Prince of Saudi Arabia” (Ryan, 2018).

In short, the Executive Branch of the United States is willing to ignore the brutal killing of a U.S. resident out of fear of oil sanctions. Congress appears to be more willing to step in amid growing frustration with Trump’s response. They just ended support for the Saudi led war in Yemen. Given this, it is unclear how far Congress can go. Whether sanctions take the form of a hold on arms sales or foreign aid, there’s still the looming threat of an oil embargo. That’s enough to make any lawmaker think twice.

Khashoggi embodied investigative journalism so well that his O Visa to work in the United States was granted due to his professional ability. His death has created conflict between morals and markets. Many actors within the Federal government want to act. Whether they can act is another question. And if they do, oil will restrict the magnitude of their actions.

Aaron Pawlinski is a junior double majoring in Math and Economics. He is very interested in pursuing economic research as a career. In his free time, Aaron enjoys playing basketball, reading, and playing guitar.