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Instability of Oil Producing Nations Could Aggravate Oil Crisis

Aired September 20, 2000 - 2:03 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

NATALIE ALLEN: President Clinton's National Security Council is concerned that instability in several oil producing nations could aggravate an energy crisis.

Here's national security correspondent David Ensor.

(BEGIN VIDEOTAPE)

DAVID ENSOR, NATIONAL SECURITY CORRESPONDENT (voice-over): With tight oil supplies driving up prices at the pumps in Europe and the cost of home heating oil for the U.S. this winter, White House national security officials must worry about the stability of key oil producers.

ROBERT EBEL, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: If I were to compile a list of unstable oil-exporting countries, I would put Nigeria and Indonesia near the top.

ENSOR: Nigerian sweet crude plays a key role in supplies to the U.S. and Europe, and the Democratic government of President Obasanjo is struggling. Its stability, some analysts argue, uncertain.

The same goes for President Wahid of Indonesia.

Another question mark: the intentions of Iraq's President Saddam Hussein. Under the United Nations' oil-for-food program, Iraq has re- emerged as the fourth-largest OPEC oil producer -- behind Saudi Arabia, Iran, Venezuela -- producing almost 3 million barrels a day. With supplies this tight, as Saddam knows, every barrel counts.

EBEL: Well, he could just take oil off the market for a while, just to be ornery, and the oil market would react overnight to that and prices, likely, would shoot through the roof.

ENSOR: But U.S. officials say cutting oil would stop food imports and might create panic, instability. They doubt he'll do it, but admit they can't rule it out.

How to avoid tight oil supplies in the future? Analysts estimate U.S. economic sanctions against Iran, Libya, plus UN limits on Iraq are costing the world up to 2 million barrels a day in production.

If Americans want to continue to drive gas-guzzling SUVs, some argue they may not be able to afford the weapon of oil sanctions for much longer.

ROBIN WEST, PETROLEUM FINANCE COMPANY: If you want to impose sanctions, recognize the cost of sanctions.

A lot of politicians believe that there's a big cost to sending the military, but that a vote for sanctions was cost-free -- didn't hurt anybody. And the fact of the matter is, long term, it does hurt people.

ENSOR (on camera): Nobody is talking about that in the presidential campaign; but on the Republican side are two former oil men, including one, Dick Cheney, who has argued in the past that the U.S. should move away from the use of unilateral sanctions.

David Ensor, CNN, Washington.

(END VIDEOTAPE)

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