A Little Throat Cutting

Oil and politics, always a volatile mixture, are boiling again in the Arab world. Western oilmen in the Middle East are understandably nervous about Washington's impending decision on Israel's request for 25 Phantom and 100 Skyhawk jets. If the sale, joes through as expected, it is,certain to spark Arab outrage. What worries the oilmen is that Arab mobs or guerrillas, whom not even the local governments can control, might vent their anger against vulnerable U.S.-owned drilling rigs, pipelines and refineries.

Arab rulers realize that mindless destruction would hurt them more than the companies, which have alternative sources of supply--for example, in Iran. After the Six-Day War Egypt's President Nasser pressured other Arab countries into shutting off oil production for a while, but quietly kept his own country's oil flowing with the help of U.S. technicians. Now, however, Arab governments share with their populations a feeling that the U.S. should somehow be made to pay for its support of Israel. That feeling neatly coincides with --and underlies--a mounting demand for a greater share of petroleum profits. The governments do not mind coercing the oilmen in order to force the U.S. to think twice about sending planes to Israel. Items:

-- Libya last week ordered Esso not to export liquid natural gas from its new $350 million plant. The government declared that Esso was charging its Italian and Spanish customers an "artificially low price," and appointed a commission to investigate. Meantime, the company's two new tankers sat idle off the coast. In another move, Libya en forced an order requiring Occidental Petroleum and a joint venture of Texaco and Standard of California to reduce production by approximatey one-third. The declared reason: they were depleting the country's reserves too rapidly. -- Algeria, which is against almost all Western countries except France, nationalized the operations of Phillips, Royal Dutch/Shell, West Germany's El-werath and Italy's Ausonia because they refused to turn over 51% of their interests to the state-run oil company. Getty Oil has agreed to Algeria's terms, and Mobil is considering doing the same. El Paso Natural Gas was exempted, evidently because Washington has yet to rule on its application to supply one billion cubic feet of Algerian gas daily to the U.S. East Coast--at considerable profit to Algeria.

>Syria continued to refuse to let engineers repair the Trans-Arabian pipeline, which was accidentally broken seven weeks ago by a bulldozer. By denying entry to repair crews, the revolutionary Syrian government gains status among Arab extremists, while conservative Saudi Arabia, where the line originates, loses up to $500,000 a day. The line's owner, Arabian-American Oil Co. (Aramco), is seeking to charter tankers to move the crude.

Over Whose Barrel? The governments can only push the companies so far. As one Beirut-based U.S. oil executive puts it: "The companies have the countries over a barrel--every barrel they produce. The name of the game is markets and marketing, and no country or group of countries today is rich enough to match what the companies have built up. If the Arab countries try, they simply cut their own throats, since they could never be competitive."

The U.S. itself does not sorely need

Arab oil, which accounts for about 3% of the total that the nation uses. But other countries are dependent on the Arabs. Europe gets more than half of its supplies from the Arab nations, and Japan 91%. Despite new oil strikes in Indonesia, Alaska and the North Sea, the Middle East still has two-thirds of the world's proven reserves.

There is a long-term threat to the West in increased Russian exploration and political gains in the Moslem countries, but the Soviet bloc obviously could not absorb all that oil. Europe's more immediate concern is the prospect that the Arabs and the oil companies might settle their differences by increasing their prices to European customers--and simply splitting the extra profit.

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