While US Energy Secretary Samuel Bodman?s call for increased security at oil production facilities in the Middle East is necessary, it does not address the larger problem of how to secure the global energy supply chain. Quite simply, demand for energy is outstripping supply, as evidenced by the razor thin spare capacity in oil industry. In an appearance on Meet the Press, Secretary Bodman said, ?The suppliers have lost control of the market and therefore, demand exceeds supply.? In 2005, the US Energy Information Agency estimated the world?s spare production capacity for crude to be one million barrels a day?just over one percent of the world?s daily consumption of oil. Therefore, there is very little cushion to soften the blow should a portion of the world?s oil production be taken offline.
Previous disruptions in oil supply have been followed by serious economic harm. For example, during the 1973 Arab Oil Embargo, OPEC reduced its oil production by 4.2 million bbl/d, and as a result oil prices doubled between October 1973 and January 1974. As shown in the graph from the US Department of Energy below, the rapid rise in oil prices caused by the 1973 oil embargo resulted in a substantial drop in US Gross Domestic Product.
The economic damage caused by the 1973 oil embargo and the current fragility of the worldwide energy supply chain have not been lost on al-Qaeda and its ideologically-aligned affiliates. Messages translated from the al-Qaeda-affiliated al-Ansar forum illustrate a keen understanding of the strategic and economic importance of oil. One al-Ansar member wrote, ?There is something that is more powerful than a chemical weapon. There is something that is easier than a car bomb. There is something that would anger the Americans, that would humiliate the henchmen of the worshippers of the cross. Sheikh Osama Bin Laden has pointed it out to you?It is: blowing up the oil pipelines of the [Arabian] Peninsula? (Terror Web Watch). The al-Ansar user goes on to write; ?It would cause economic damage to the American people, and, in time, human losses because of [the effect on] economic progress in Iraq” (Terror Web Watch).
Not coincidentally, these statements can be traced back to statements made by Osama bin Laden. Bin Laden has long promoted the value in attacking targets of economic value as a way to sap the resources of the US. In a statement made in October 2004, bin Laden said, ?we bled Russia [Country Profile] for 10 years until it went bankrupt and was forced to withdraw [from Afghanistan] in defeat. We are continuing in the same policy to make America bleed profusely to the point of bankruptcy.”
Unfortunately, al-Qaeda and its ideologically-aligned affiliates have an abundance of targets within the global oil infrastructure to choose from. Given the virtually non-existent spare capacity, a crippling attack anywhere in the oil supply chain would be felt throughout the world. Among these widely available and lightly guarded targets are pipelines and strategic supply choke points.
Pipelines are considered to be a soft target for terrorists due to their easy access and lax security. Generally, pipelines are buried underground; however, terrorists can easily locate segments of the line that are exposed at river and other crossings. The sheer number of exposed pipeline and wide dispersal through remote areas makes them virtually impossible to guard. Moreover, no specialized skill is required to execute an attack on an exposed pipeline. A crude improvised explosive device (IED) can be attached to an exposed section of a pipeline and detonated remotely to a devastating effect. Insurgents in Iraq have targeted pipelines with increasing success, most recently in March 2006 and notably October 2005 . A sustained campaign has lowered Iraq?s production from a pre-war level of an estimated 2.5 million bbl/d to approximately 1 million bb/d. This decline in production has wrought untold damage on Iraq?s economy and, in turn, contributed to the current record high oil prices.
Another vulnerability in the oil industry?s supply chain is the handful of strategic shipping choke points such as the Straits of Hormuz, Bab el-Mandab, the Bosporus Straits, the Suez Canal, and the Straits of Malacca. According to Senator Bill Nelson (D-FL), , a well-executed attack on a tanker transiting the Straits of Hormuz could reap untold economic damage. ?Sooner or later the terrorist is going to try to sink a tanker in the Strait of Hormuz, and when that occurs, and that free flow of oil out of the Persian Gulf ends, you’re going to have another great energy crisis.” Approximately 16-17 million bbl/d transit the Straits of Hormuz, which has two one mile wide channels for maritime traffic. There is a high likelihood that sinking a ship in the right location within the Straits would halt further shipping traffic until the crippled vessel was raised: likely upward of weeks to resolve. Only a fraction of the lost oil could be routed through alternate routes, such as overland pipelines, leaving a massive deficit of oil that would severely impact the world?s economies. Al-Qaeda has demonstrated a capability to conduct waterborne attacks as evidenced by its attacks on the USS Cole and the Limburg . While neither of these attacks resulted in the sinking of ships, an alteration in al-Qaeda?s tactics might successfully down a ship.
Obviously, pipelines and strategic choke points are not the only targets available to terrorist. As evidenced by the attack on the Abqaiq production facility , terrorists may well attempt to target other facilities in the oil supply chain. As a result, increased security of the oil infrastructure throughout the Middle East is unlikely the remedy the current problem. Over the short-term, investment to increase spare production capacity is needed in order to lessen the shock of future supply disruption. Over the long-term, seriously investment into alternative energy sources is required in order to break the world?s reliance on the steadily decreasing supply of oil.
