Mideast sands subtly shift; Glut defies reduction

A tacit US-Saudi partnership appears to have stymied OPEC's effort to burden consumers with another boost in the price of oil. In different ways Americans and Saudis -- respectively the world's biggest consumers and exporters of oil --mated at 2 million to 3 million barrels a day (m.b.d.).

Americans have done this by steadily shrinking the amount of gasoline, home heating oil, and other petroleum products that they burn.

The Saudi contribution was to boost their daily production from 8.5 to about 10 m.b.d., offsetting efforts by other members of Organization of Petroleum Exporting Countries to cut the cartel's output.

The sheer weight of Saudi production -- 10 m.b.d. of the cartel's total output of 24.5 m.b.d. -- frustrates the ability of other cartel partners to cut back enough to erase the current glut.

Most OPEC members, but not Saudi Arabia, agreed at their just-concluded meeting in Geneva to reduce output by 10 percent. Such a cutback would mean a maximum of 1.5 m.b.d., not enough to create tightness in the market.

Experts doubt, in any case, that the full 1.5 m.b.d. cutback will be achieved , because some cartel members want to increase, not decrease, their production.

Iraq and Iran, notes John Lichtblau, executive director of the Petroleum Industry Research Foundation Inc., now are boosting their output, trying to recoup some of the heavy financial losses suffered during their sputtering war.

"Someone," says Mr. Lichtblau, "has to make room for them. But who, if the Saudis will not?'

If Saudi output stays at 10 m.b.d., and if Iraq and Iran boost their exports above the present 2 m.b.d., some OPEC nations will have to cut back more than 10 percent.

Otherwise, experts point out, the cartel has little hope of making much of a dent in the world's present oversupply of oil.

Some key OPEC members -- including Kuwait, Libya, and Nigeria -- already had reduced their output before the Geneva meeting, partly because they could not sell all their oil at current prices.

This is especially true of Libya and Nigeria, which charge $40 or more per barrel. This compares with $32 for Saudi oil -- OPEC's lowest price -- and a $ 36 average for other cartel members.

The United States, meanwhile, continues to make striking progress in reducing oil imports and overall petroleum consumption.

In April, according to the American Petroleum Institute (API), total oil imports declined 22.6 percent below the same month of 1980.

Imports, says the API, now represent 35 percent of US oil consumption -- down from 42 percent in April 1980 and 45 percent the year before that.

Other signs of conservation include:

* Overall US consumption of oil in April was 6.4 percent below the same month of 1980.

* Americans burned 3.6 percent less gasoline -- a drop of 245,000 barrels a day -- than in April of 1980, despite the fact that gasoline prices at the pump were slightly lower in April than in March.

"US gasoline consumption," says Lichtblau, "peaked in 1978. We seem to have a structural, built-in momentum for less gasoline consumption."

* Use of airplane jet fuel and fuel oil for factories and other large buildings also was down, while home heating oil deliveries were about equal to a year ago, according to the API.

Sharply higher retail prices for gasoline, heating oil, and other oil products, analysts agree, provide the chief spur to conservation. Millions of low-income and elderly Americans have been hard hit by the increase in their fuel bills.

In 1973, at the time of the Arab oil embargo, only 15 percent of US petroleum imports came from Arab wells. Now, although the total volume of imports is sharply down, nearly 45 percent of all oil imported by the US comes from Arab countries.

This creates a paradoxical picture. Americans, because of conservation, are less dependent on foreign oil than at any time in recent years. Yet US dependence on Arab members of OPEC grows.