Pressure Builds Over Bush-Saudi Oil Talks
Posted on: Friday, 16 May 2008, 06:00 CDT
By Charles Levinson
JERUSALEM -- President Bush visits Saudi Arabia today to meet with the leader of the world's leading oil-producing nation amid growing pressure to do something about rising fuel prices at home.
If precedent is any indication, however, Bush is unlikely to get much sympathy from King Abdullah, the Saudi monarch. He asked Abdullah in January to increase production and was rebuffed.
"I hope that President Bush goes in with low expectations," says Robert Ebel, an energy analyst at the Center for Strategic and International Studies. "He's going to be disappointed if he doesn't."
As fuel prices set records almost daily, U.S. politicians facing fall elections want to show voters they are taking action. Two congressional proposals, though, could put a crimp in the United States' relationship with Saudi Arabia, one of its key allies in the Middle East.
"The politicians are under pressure to do something, anything, and so they're thrashing around," says energy consultant J. Robinson West of PFC Energy. "Unfortunately, there may be some unintended consequences of their actions."
One bill would freeze four highly sought-after arms deals, including a $123 million shipment of sophisticated laser-guided smart bomb kits that would give Saudi airstrikes pinpoint accuracy. Another would give U.S. prosecutors the authority to apply U.S. antitrust laws to oil-producing countries.
New York Sen. Charles Schumer, a Democratic sponsor of the first bill, says the legislation is intended to give Bush leverage in his meeting at the Saudi monarch's horse farm.
"We cannot settle for a smile or a handshake or even a glimpse into his soul," Schumer said. "We need a commitment to pump more oil."
Congress overwhelmingly passed a bill Wednesday telling Bush to stop depositing oil in U.S. reserves. That would put another 70,000 barrels a day on the market, a trickle of the more than 20million Americans consume daily.
"It's all political posturing, and the world is listening to America say these things, and it may mean strained diplomatic relations in the future," says Elizabeth Rosenberg, an analyst at Argus Media, an energy news agency.
Many experts say bills such as Schumer's are short-term fixes at best and miss the larger problem. Saudi Arabia is not to blame for higher oil prices, West says.
"Bush is under political pressure domestically, and he understands the situation internationally, so he'll deal tactfully with the Saudis," West says. "And the Saudis also understand Bush's position, so it will be a very tactful exchange, but it's unrealistic to expect any results."
If anyone is doing the right thing, West says, it is Saudi Arabia, the one oil-producing country that is investing significant percentages of its oil profits in developing new production capabilities.
"Saudi Arabia is the last country we should be targeting," West says.
Rising oil prices are the product of skyrocketing demand fueled by rapid economic growth in China, India and, to a lesser extent, Persian Gulf states. Saudi Arabia has an estimated 2 million barrels a day of spare capacity but much of it is undesirable heavy crude, which is expensive to refine and less suitable for conversion into gasoline.
"They are trying to walk the fine line in which oil prices stay high so they make a lot of money, but not so high that people slow down in their consumption," Rosenberg says.
Bush's desire for more Saudi oil will receive an unsympathetic response as long as the United States is unwilling to increase supply or reduce demand, West says. Bush has refused to stop adding oil to the national reserve stockpile. The administration also has refused to drill in the oilfields in the eastern Gulf of Mexico because Florida objects.
"It would appear that the tourism and real estate industry of Florida is more important than our energy security and, frankly, Saudi doesn't understand why America is making demands on everyone else when they're not prepared to do the same," West says.
"Politicians don't want to explain to people that we have to do something for ourselves," says Adam Sieminski, the chief energy economist for Deutschbank. "We have to have tighter fuel-efficiency standards for our automobiles, we have to build more nuclear energy plants, and we have to drill more gas fields in the Gulf off of Florida."
Source: USA TODAY
 |
 |
User Comments (0)
RSS Feeds