#1) Oil is an issue, but it is a demand issue primarily. The US has not done enough to reduce their use. I think the current situation is healthy to make the right long term adjustments. You also cannot argue against a country like Saudi trying to make decisions for its own interest.
Here is an example that puts this into prospective:
A few weeks ago when the democrats were arguing about the Gas Tax Holiday issue, one of the most hypocritical videos I saw is of Mrs. Clinton riding with a blue collar worker to a gas station. The idea was that gas prices are impacting working class families. The problem is that worker was riding a large pickup truck that was wasting energy. That visual summarizes the problem for me. The consumers got used to wasting energy due to the low prices of the 90’s and the politicians never paid attention to a long term responsible energy policy.

The US needs to adopt policies like Europe, by increasing taxes on gas (a little at a time) and invest in alternative energy. This will create higher prices for gas, which will reduce demand also. Some of the taxes can be used to provide relieve for low income families, but as direct income tax reduction not tied to gas taxes. People will learn, like Europeans did, that is better to own a small 4 cylinders car.

Do not get me wrong, Saudi citizens also need to use gas more efficiently. This can be accomplished by increasing gas prices and may be offer more subsidies on other commodities. Also, Saudi uses too much oil for generating electricity for growing cities and operating declination plants. This brings us to my thought on #2 above

#2 The US by offering Nuclear help to Saudi will allow Saudi to offer more oil to the global markets by reducing domestic oil use. Strategically this also makes sense for the US as it insures control over the technology (i.e. making sure the use is peaceful) and wards off competition which giving American companies some sizable projects. Actually I was surprised that a president that has made a habit of making strategic blunders in the middle east actually made the seemingly right decision on this one.
Regarding Iran’s argument I think John summarizes it better. No one believes Iran does not have ambitions to develop a bomb.

The difference is that the KSA has a long-standing policy of forswearing the development of nuclear arms. Iran, to the contrary, has made no such promises and keeps saying stuff about ‘annihilating Israel’.

Most of the world would be comfortable with Saudis generating electricity through nuclear reactors. They’re less comfortable with Iran starting a nuclear war.

1. How can one argue that oil is not an issue AND

2. Why should Saudi have nuclear aspirations but Iran should have none?

5 years from now we may be able to see most people learn the lesson and replace their SUV’s with more efficient vehicles. Replacement of HVAC’s, appliances, and light bulbs with higher efficiency ones may also start occurring more rapidly. Nothing better than market dynamics to drive improvements. Trying to patch this artificially with a short term solution because we are election year is just going to make things worse.