Written by Dr. Nimrod Raphaeli
Since the Arab oil embargo on the United States in 1973, political campaigns in the United States at all levels, and particularly at the presidential level, have called for a national oil policy that would reduce the dependency on Middle East oil.
While reducing the dependency on oil imports from anywhere should be a high national priority, much of the rhetoric about dependency on oil imports from the Middle East by the U.S. bear little relationship to the reality. (Memri.org....resourceful)
The Reality of Oil Import by the United States
Most recent data released by the Energy Information Administration of the U.S. Department of Energy show that two countries exported more than 1.40 million barrels of crude per day (b/d) to the U.S., while four other countries exported over 1 million b/d of crude oil (see Table 1). The top five exporting countries accounted for 68%.of U.S. crude oil imports in October 2008, while the top 10 sources accounted for approximately 86% of all U.S. crude oil imports.
The top sources of U.S. crude oil imports for October 2008 were Canada (2.066 million b/d), Saudi Arabia (1.435 million b/d), Mexico (1.256 million b/d), Venezuela (1.027 million b/d), and Nigeria (0.935 million b/d). Total crude oil imports averaged 10.111 million barrels per day in October, which is an increase of 1.704 million barrels per day from September 2008, because of hurricanes in the Gulf of Mexico, but actually about 2 million b/d less than the level of import in 2006.
The analysis of the data in Table 1 yields interesting results: The total 2008 import of crude from the five largest exporters through October was 6,594 million b/d. Of these, the share of Saudi Arabia was 1,918 million b/d or 23%. The total import from the 15 largest exporters of crude to the U.S. for the same period was 9,098 million b/d of which the share of four Arab countries, Saudi Arabia, Iraq, Algeria and Kuwait was 2,683 million b/d or 29.29%.
However, if we look into the share of Arab oil as of the total oil import by the U.S. for the month of October 2008, the figures will be lower. For that month, import from Saudi Arabia of 1,435 million b/d accounted for 14.2% of the total U.S. crude import, and the share of the four Arab countries was 2,247 million b/d, or 22.2%, of total U.S. crude import.
These numbers are significant but would not be crippling for the U.S. economy if they were to be sharply reduced for whatever reason. Energy saving resulting from the current economic recession and the development of alternative sources of energy, which is a key objective of the new Obama administration, will no doubt lessen the dependency of the U.S. on crude imports in general, and on Gulf oil in particular.
While the U.S. has been the largest oil importer in the world, whose imports in 2006 averaged 12.3 million b/d, this figure is trending downward as consumption began to decline in 2008, when U.S. petroleum deliveries - a measure of demand - fell by 6%, with a decline of all major products made of crude.  The U.S. also remains the third largest oil producer in the world: it averaged 8.3 million b/d in 2006, behind Saudi Arabia with 10.66 million b/d and Russia with 9.67 million b/d.
The Diminishing Wealth of the Arab Oil Exporters
The question of U.S. dependency on Middle East oil must also be considered in the light of the rapidly diminishing wealth of the oil producers. After hitting a high of $147 a barrel in July 2008, world oil prices have crashed to their lowest level since 2004. Commenting on the impact of declining prices on oil-producing nations, Didier Houssin - a senior official of the International Energy Agency (which represents the interests of the Western oil consumers) - noted: "The brutality and speed of the price decline is a huge shock economically and politically for some of these countries." 
While oil prices were spiking and petrodollars accumulating through July of 2008, speculations were rampant about the size of the wealth of the six members of the Gulf Cooperation Council (Saudi Arabia, United Arab Emirates, Qatar, Bahrain, Kuwait and Oman.) As the price of oil increased from $27.69 per barrel on average in 2003 to as much as $100 per barrel in 2008, the U.S. and Western countries became preoccupied by what was seen at the time as a threat to the "Commanding Heights" of Western capitalism. According to the Saudi economic newspaper Al-Iqtisadiya, the assets managed by the GCC members were equal to one-fifth of the total assets of the central banks of countries with sovereign wealth funds (SWFs), an amount estimated at $5.3 trillion.  The global total of sovereign funds was forecast to rise to $12 trillion by 2015 as a result of further oil revenues and capital appreciation.  As a result the political influence of these countries increased too.
However, due to the global financial crisis, GCC countries saw their holdings shrink by $826 billion to $1.2 trillion in 2008, and the trend could continue as the price of crude continues to decline. In 2008, GCC countries pulled some $300 billion in oil profits, $70 billion more than 2007. Tumbling oil prices have meant budget deficits and have limited a critical source of foreign investments in other Arab countries. Up to last year, the government-run real estate and IT companies of the Gulf had emerged as major powers in boosting the economies of Egypt, Jordan, Syria, Morocco and other peripheral Arab states [e.g., Morocco and Tunisia].  In Egypt alone, foreign direct investment is scheduled to decline by half to $7 billion from $12 billion in 2008. Moreover, the declining of assets will defer indefinitely or cancel major acquisitions by sovereign wealth funds (SWFs) of American or European major assets.
The decline of oil revenues has meant budget deficits in oil exporting countries. Available figures suggest that Saudi Arabia, the largest oil exporter in the world, will post a deficit in 2009 of $17 billion, the first since 2002; Oman, $2.1 billion; and Dubai, the second largest emirate of the United Arab Emirates, $1.1 billion.
This brief analysis sought to underscore two critical issues of major significance for U.S. strategic and economic policies: First, the alleged dependency on Middle East oil is greatly exaggerated. With the help of its oil strategic reserves, its national production of oil and the availability of oil from two friendly neighbors, Canada and Mexico, coupled with the drive for developing alternative energy sources, the U.S. could muddle through with reduced Middle East oil for a long while. Second, the sharp decline in oil revenues will lessen the threats of applying pressures on U.S. foreign policy by wealthy country or even the threat of acquiring vital U.S. assets by sovereign wealth funds.
Of course, speculating on the price of oil in the long term is foolhardy. A buyer's market today could quickly become a seller's market tomorrow and crushing oil prices could turn into spiking oil prices in no time. To avoid future shocks, the U.S. should simultaneously conserve existing sources of energy and develop alternative sources. The question of reducing dependency on oil imports should cease to be a political rhetoric and turn into a national plan of action.
*Dr. Nimrod Raphaeli is Senior Analyst (emeritus) at MEMRI.