There was a time back in 1979 and 1980 when establishment energy experts such as Daniel Yergin and Walter Levy were assuring anyone who would listen that the world had better get used to dependence on Middle East oil -- especially from Saudi Arabia -- at steadily higher prices.

T. R. McHale, a British analyst, wrote that Saudi Arabia "has an economic power base unique in world history. . . . It can literally buy any future that is commercially 'buyable.' "

Unfortunately, free-world politicians for the most part listened to such "experts." They knuckled under to the Saudis in the formulation of strategic and geopolitical policy, and made huge military expenditures to protect the "lifeline" of oil from the Persian Gulf.

At the same time, a lesser-known economist, Eliyahu Kanovsky of Bar-Ilan University in Israel, was questioning the conventional wisdom.

Kanovsky foresaw that the long-term pressure on oil prices would be downward. In a landmark study completed in March 1982, shortly after the last increase in Saudi prices, Kanovsky predicted "the progressive dethroning of Middle East oil," with profound political, strategic and economic implications.

We all know now how wrong the establishment experts were: Oil prices have plunged from a high of about $35 a barrel to about $10, and the Organization of Petroleum Exporting Countries' share of the market has dwindled while the non-OPEC share has grown.

Meanwhile, reduced oil consumption accompanied by lower prices also has been a blow to the Soviet economy, even though the Russians have now passed the Saudis as the world's No. 1 exporter. Some 70 to 75 percent of the Soviets' hard-currency earnings comes from the sale of natural gas and oil to Europe.

But cheap oil has reduced Europe's eagerness to buy Russian natural gas.

Against the accepted earlier estimates that in 1987 the fully operational Siberian gas pipeline would yield the Russians $10 billion in annual revenue, Kanovsky calculates they'll be lucky to pull $3.5 billion out of it.

The record suggests that Kanovsky is not a man to be ignored. In a new study, Kanovsky gives us startling information on the precarious economic health of Saudi Arabia and other Middle East countries. In large measure because of blunders by the Saudi leadership in the past decade, he says, "All the king's horses and all the king's men will not put the Saudi economy together again."

Kanovsky's thesis is that the Saudi rulers, desperate for revenue, need to cut back their domestic budget, but will find it almost impossible to do so.

He sees the Saudi economy as overwhelmingly dependent on oil revenues, because the diversification that the Saudiphiles predicted has never developed. That means the royal family will have little choice but to steadily boost oil exports to satisfy their need for money.

In an interview, Kanovsky -- here for a sabbatical year -- said that, when the Saudis started to flood the market with oil, they didn't expect prices to plunge the way they did: The Saudis guessed -- and guessed wrongly -- that others would cut back more.

From fiscal 1980-81, when the Saudis ran a $36 billion budget surplus, the situation has deteriorated into a $17.4 billion budget deficit in fiscal 1985-86, Kanovsky said.

Saudi monetary reserves, which had touched nearly $150 billion three to four years ago, are reported by the International Monetary Fund to be down to $100 billion. But Kanovsky observes that, if some $30 billion in what are probably uncollectible loans to Iraq and others are taken out of the official reserve figure, the real cushion is not more than about $70 billion, or less than half of what it was at the peak.

For the first time, Kanovsky has detected a significant drop in the budget commitment the Saudis are making for military expenditures -- from a recent level of about $19 billion to $16.5 billion.

That suggests, he says, that the Saudis are beginning to pare back their financing of military costs for Iraq and Syria, "and perhaps we may see a reduction in the Middle East arms race."

Meanwhile, the oil price collapse is having a devastating impact not only on the Saudi economy, but elsewhere in the Middle East.

The situation in Egypt is illustrative: Three years ago, one out of six Egyptian workers was employed in Arab oil fields in other lands, remitting $4 billion to $5 billion back home. That was a tremendous boost for an economy with a gross domestic product of no more than $30 billion.

For Egyptian workers, as Kanovsky says, "it was a dream come true. They could earn as much in three years in Kuwait as they could in a lifetime in Egypt." But now this safety valve for the Egyptian economy is closed: As oil prices collapse, Egypt not only loses the remittances, but has to try to reabsorb returning migrant workers. Jordan and Syria have been hit in somewhat the same way.

What of the future? The forecasters and pundits who missed the boat in 1980 now assure us that cheap oil "The oil markets will remain depressed over a long period of time. . . . " -- Economist Eliyahu Kanovsky prices will dampen efforts to conserve; that non-OPEC production will dry up, and that, sometime in the 1990s, OPEC will be back in the cat-bird seat.

Not likely, says Kanovsky. "The oil markets will remain depressed over a long period of time. Don't forget, Iran and Iraq hang like an albatross over the oil market: They have huge supplies, and both are hungry for revenue."

That doesn't mean, he says, that the chance of a new oil crisis sometime in the future should be evaluated as an absolute zero. The United States could consider imposing oil import fees as an "insurance policy," he suggests. Above all, he urges American government officials -- with whom he regularly consults -- to provide incentives for continued conservation.