Driving force

Some of the hottest terror threat assessments this summer are coming not from the Homeland Security Department but from international investment bankers. After gruesome al-Qaeda-linked attacks in Saudi Arabia last month that left 25 ­foreigners (including eight Americans) and five Saudis dead, oil-industry analysts are looking hard at what an attack on Saudi Arabia's oil infrastructure could mean for average Americans.

With the destruction of the World Trade Center towers on 9/11, Wall Street shut down for five days, the airline industry and tourism entered a tailspin, and recession soon followed. With Saudi security under attack, world oil prices hang in the balance. How high could the price of a gallon of gas go? A successful assault on the Saudis' highly centralized oil facilities, analysts warn, may double already soaring U.S. gasoline prices-to $4 a gallon.

One-tenth of the world's oil flows daily through Ras Tanura, an offshore ­terminal in the Persian Gulf that is the largest in the world. Only three primary export terminals operate in Saudi Arabia, but they handle up to one-third of the world's total oil supply. Production ­originates in two large oilfields, and nearly all Saudi crude processing takes place in just one facility, 25 miles inland from the Gulf of Bahrain at Abqaiq.

"A terrorist attack on each one of these hubs of the Saudi oil complex or a simultaneous attack on a few of them is not a fictional scenario," reads a report from the International Institute for Global Security (IIGS). "A single terrorist cell hijacking an airplane in Kuwait or Dubai and crashing it into Abqaiq or Ras Tanura could turn the complex into an inferno," it continues, leaving the kind of damage that would take up to 50 percent of Saudi oil off the market for six months and eliminate most of the world's oil reserve-"sending oil prices through the ceiling," concludes the IIGS.

Terror experts concur with the security analysis. "Such an attack," said former CIA Middle East field officer and author Robert Baer, "would be more economically damaging than a dirty nuclear bomb set off in midtown Manhattan." Mr. Baer believes oil-related terrorism would "bring the world's oil-addicted economies to their knees, America's along with them."

That, in part, has been the goal of Osama bin Laden all along. Al-Qaeda ­documents recovered from Afghanistan, together with recent intelligence culled from detainees at Guantanamo Bay, ­suggest that the mastermind seeks to end not only American lives but American prosperity, too. A battle plan issued by al-Qaeda leader Abdulaziz Mugrin just ahead of May 29 attacks on Khobar compounds housing oil workers proves the terror network has some means to achieve its goals.

"If you can imagine the terrorists' ­targets in concentric circles, then the target overall is America but the bullseye is the U.S. economy," said Craig Smith, chief executive of Swiss America Trading Corporation. "Al-Qaeda knows it cannot take us on militarily; they want to defeat us economically." Mr. Smith believes their goal extends as far back as the first attack on the World Trade Center in 1993, and forward to attacks planned on the Arab Peninsula.

"Until now al-Qaeda has focused on soft targets in Saudi Arabia," said Mr. Smith, but "the hard targets are next in Gulf port cities" with a multifaceted goal: Force Westerners out and drain the lifeblood from what the Islamic extremists say is Western decadence.

From this perspective, Osama bin Laden is a freedom fighter out to overturn world dependence on both Saudi oil and the U.S. dollar. Bin Laden pronouncements often reference the U.S. budget deficit and other indicators as a sign of vulnerability. "We forget that Osama bin Laden is no peasant; he is an extremely educated man," Mr. Smith said.

Mr. Smith insists he is no conspiracy-monger advising Americans "to buy dehydrated banana chips and Krugerands and wait in the hills." But, he says, "we should be looking more seriously at the potential threat to our oil supply."

U.S. officials may be saying little about economic terror threats, but Saudi leaders- who once thought impenetrable the Western compounds attacked last month in Riyadh and Khobar-are acutely aware of their vulnerability. They realize that terrorists who have kept Iraq's Kirkuk-Ceyhan pipeline out of commission-at an estimated cost of $2.5 billion-threaten the Iraq-Saudi border.

Saudi Arabia will move to fortify its borders starting this fall with plans to install a high-tech electronic defense shield along its border with Yemen. Cost: $10 billion.

But, warns a working draft report issued May 30 by the Center for Strategic & International Studies, it is "virtually impossible" for Saudi Arabia to fully secure its Gulf or Red Sea coasts against smuggling and infiltration by small craft. "Traffic in the Gulf and Red Sea is simply too high, the coasts are too long, and ­sensors cannot track movements by dhows and small craft," the report says. Military protection of petroleum export facilities, it said, is adequate "with roughly two weeks of warning" but ­normally is limited.

Financial analysts are looking beyond port security, however, to macro-scenarios that could pose more than one-time threats to the oil supply. Saudi's royal family is aging, beset by ­divisions, and resented for imposing Koranic law on the masses while its own billionaire princes live lush and high. Instability in Saudi Arabia and Iraq would favor Iran, whose militant mullahs are suspected of backing terror attacks. If they won control on the peninsula, says analyst John Myers, "then they will own the rights to half the world's oil reserves and about 90 percent of the world's cheap oil."

Writing for the online financial sheet The Daily Reckoning, Mr. Myers said, "The numbers favor the radical elements. Just consider the big picture: Iran and Iraq have a total population of over 90 million. Kuwait and Saudi Arabia have fewer than 30 million people. If push comes to shove, the Sunni royals ­running Saudi Arabia will be the under­dog when matched against the Shiites of Iran and Iraq."

If one day American motorists wake to that kind of realignment, they will look back at $2 a gallon gasoline-and marvel at the bargain.