Dr. Fadhil J. Al-Chalabi is already murmuring with merriment at a picture someone has put on a wall of Ronald Reagan endorsing Chesterfield cigarettes in 1951. Indeed, how odd it is to see a president posed with a cigarette in his mouth.
Then chuckles become guffaws. Someone is suggesting that the mere mention of Al-Chalabi's title, which is deputy secretary general of OPEC, as in the Organization of Petroleum Exporting Countries (as in $37 a barrel, gas lines, wood stoves and double-digit inflation) rouses thoughts of power and riches so vast that ordinary mortals quail to think of it all.
"Ha ha ha," says Al-Chalabi.
Certainly he doesn't look like he has the power to inflate the dollar like the Goodyear blimp, to empty the freeways, to hang icicles inside our living rooms. He is a 51-year-old Iraqi lawyer and economist with a soft handshake. rHe wears a brown glen plaid suit and a knit tie, and he carries a sporty little suede hat. He is merely the supervisor of research in the secretariat, he says, studying economic activity in the industrialized nationa, the state of the dollar and so on.
"The real power is in the hands of the politicians, not the technocrats. I am a technocrat, an international bureaucrat. I am not rich," he says. And: "When I check into hotels I have to write down where I work, and I say OPEC, and nobody pays attention. Well, sometimes they do, jokingly. I entered through customs once in Puerto Rico and the immigration official said: 'Since you're from OPEC, why should we let you in?'"
Ha, ha, ha.
People are generally friendly, he says. "There are many people who are well-informed.Others are influenced by the media. In Europe people are better informed than in America, though in academia here they are very well-informed."
He is told that should he wander into some small towns in America, he might get asked some very hard questions indeed, though violence would seem unlikely.
He smiles. "No, no violence."
It is a popular American notion that the members of OPEC have gotten up on the mornings after price hikes, and when they shuffled out to get the paper they looked to the sky for the parachutes of the 82nd Airborne.
A false notion, he says: They were not worried about what the governments of the industrialized countries would do. "We were concerned with the oil companies. We knew that their government's supported them, because they were benefiting by acquiring oil at a cost of next to nothing. But it was the companies that concerned us. In 1960 the level of posted prices for our oil was half what it was for oil on the East Coast of the United States. The concession system made companies the sole arbiters of the price of oil. We knew three things for sure: The price of oil was understated, the price of oil was eaten up by inflation, and the depletion of oil was going very fast."
So why didn't they tell the oil companies to buzz off? Why not just nationalize them back in, say, 1959?
Ha, ha, ha.
"I'll tell you why: In 1959, the world market for crude was controlled by the Seven Sisters [Exxon, Gulf, Texaco, Royal Dutch Shell, Mobil, Standard Oil of California and British Petroleum]. You remember what happened to [Mohammed] Mossadegh in Iran? Mossagegh nationalized the oil, and then he was unable to sell it. If you take the countries one by one. . ."
Which is what OPECZ ended, unifying 13 of the world's top producers against the Seven Sisters. But OPEC didn't make a whole lot of difference until a wild confluence of events in 1970 that only an astrologer could have predicted or explained. The Suez Canal was closed, cutting down on the shor-haul supertanker traffic from the Persian Gulf to Europe. It didn't matter, because the Trans-Arabian Pipelinbe carried plenty of oil. Besides, Libya was supplying 25 percent of Europe's needs. However, Muammer Qaddafi had just seized power in Libya and wanted to teach Occidential Petroleum a lesson. And just then the pipeline exploded, and there was already a cut in oil supplies to Europe becuase of a civil war in Nigeria and suddenly prices were rising, leapfrogging, skyrocketing, and ha, ha, ha, you Seven Sisters.
"This created a shortage," says Al-Chalabi. "In shortages the prices go up."
But wasn't this just a freakish congeries of circumstances?
"The companies were doing something quite abnormal, it was an imbalanced situation," he says. In short, sooner or later, it had to happen.
But isn't it possible that just as nobody foresaw that happening, we might have another set of events just as freakish that might reverse the situation?
"No, no," he says, with all the faith of a man who has found reason in the chaos of international politics. Okay. But would he have predicted the current price of oil when OPEC was founded in Baghdad in 1960?
"Would you have predicted the dollar would be worth 50 cents?" he asks.
He points out that back then, "the oil technocrats knew three things: The price of OPEC oil was understated, the price of oil was eaten up by inflation, and the depletion of oil was going very fast."
Ah, but in 1974, our very own economist Milton Friedman said that OPEC would collapse and oil would never reach $10 a barrel, as reported in "Paper Money," by Adam Smith.
Much laughter from Al-Chalabi, who adds to the fun by reminding a listener of an MIT economist who predicted from 1971 to 1974 that "the price of oil should fall to $1." Al-Chalabi himself is a Ph.D. in economics from the University of Paris, and he also has an Iraqi law degree. e
He is here making speeches at Johns Hopkins and the National Press Club and other centers of influence and/or curiosity, "to make our case known."
Part of that case, as it turns out, is the suggestion that the price of oil has risen no faster than the price of anything else.
But what about the price of a Volkeswagen, which is the first commodity that comes to mind. Since 1960, the price may have trebled or quadrupled, but it hasn't increased by a factor of 19.
"Food," says Al-Chalabi, tendering the argument with a hint of a tentative smile. "If you look at the curve of the price of oil, you see that the price of food has gone up on that curve."
Food? Let's see, the price of steak in 1960 was, what, 40 or 50 cents a pound. And now it can be had for less than $2 a pound. . .
"But food is so cheap here in America. . ."
Which leads to a bit more of the old ha, ha, ha, except this time it isn't just Al-Chalabi laughing, it's everybody. Best to laugh about these things when possible.