EDITORIAL Saudis and oil consumers

It has been a good month for Saudi Arabia. Oil consumers have fared well, too.

In several vital international arenas, Saudi officials received messages they must have found reassuring.

For its recent fiscal management, the kingdom received cautious praise from the International Monetary Fund (IMF). Budgetary restraint and revenue gains associated with rising oil prices last year combined to produce Saudi Arabia's first current account surplus in 13 years. The IMF urged further economic reform and noted that oil prices can fall as well as climb-a reminder the Saudis probably did not need.

Relaxation of Saudi fiscal pressures is good for the world's oil consumers, who need steady availability of oil. Saudi Arabia serves that interest best when it's prosperous and eager to sell oil. The worst case for oil consumers would be the point at which fiscal strains tricked Saudi Arabians into believing they had nothing to gain from oil trade.

Recognizing stability

In a related lift to the kingdom, a high level Saudi delegation to the U.S. early this month received confirmation of their country's status as a secure and dependable supplier of oil. The affirmation is reported to have come during meetings at the Department of Energy and in talks between U.S. Vice-Pres. Al Gore and Prince Sultan, Saudi Arabia's defense minister and second deputy prime minister.

For the Saudis, the gesture was more than diplomatic nicety. They hear the relentless assertions in the oil consuming world about insecurity of their country and region and their consequent unreliability as oil suppliers. The claims always underlie efforts to reduce purchases of Saudi and Middle Eastern crude.

U.S. officials offered more than mere courtesy, therefore, when they recognized the Saudi role in stability and security of worldwide oil supplies-and therefore the Saudi contribution to the interests of oil consumers. The recognition was appropriate.

Something else emerged from the meetings between the Saudi delegation, which included Oil Minister A* Ibrahim Naimi, and U.S. officials. The Saudis heard that the Clinton administration has no plans to impose a tax on the carbon content of fuels as a way to reduce emissions of greenhouse gases. Soon after the Saudi group received that message from U.S. officials in Washington, D.C., a Department of Energy official repeated the assurance in Abu Dhabi.

"We're not looking at any carbon-based taxes or other forms of energy taxes" in response to suspected climate change, said Leonard L. Coburn, director of DOE's office of policy analysis, trade, and investment for regions including the Middle East. He spoke at the Middle East Petroleum and Gas Conference.

With fuel taxes, of course, Saudi marketing and consumer price interests directly coincide. Both groups received further reason to cheer at the beginning of the month, when the European Commission again delayed action on a proposal to raise minimum taxes on key oil products and to establish minimum levies for natural gas and electricity. Sponsors of the proposal call it a revenue generator crucial to the ability of governments to meet fiscal targets set for European monetary union. But it also was seen as a way to reduce greenhouse gas emissions. An earlier European move toward an outright carbon tax stalled.

Important gains

In half a month's time, therefore, the world's most important single seller of crude oil has received ratification of a fiscal program to which oil sales are crucial, U.S. diplomatic confirmation as a reliable trade partner, and evidence of resistance to tax hikes corrosive to demand for crude in important markets. And consumers in those markets have witnessed steps supportive of supply security and price restraint.

Both sides of the oil transaction thus have scored subtle but important gains from events in international relations. For the oil business in general, March so far has been a good month.