Bush says Saudi oil boost doesn't solve US problem

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TERENCE HUNT | May 17, 2008 07:08 PM EST | AP

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U.S. President George W. Bush walks with Afghanistan President Hamid Karzai following their meeting in Sharm el-Sheik, Egypt, Saturday, May 17, 2008. (AP Photo/Susan Walsh)

SHARM EL-SHEIK, Egypt — President Bush said Saudi Arabia's small increase in oil production will not solve soaring U.S. fuel prices, but he defended the wealthy kingdom Saturday against American lawmakers "screaming the loudest" for Riyadh to open its spigots.

Bush also encountered bitter Arab criticism that he favors Israel too heavily and was bluntly questioned by Egyptian President Hosni Mubarak about whether he is serious about peacemaking. Bush said he was "absolutely committed" to reaching an Israeli-Palestinian agreement by the end of his presidency next January. But there was no sign during Bush's five-day Mideast trip that the two sides are moving closer toward an accord.

"It breaks my heart to see the vast potential of the Palestinian people really wasted," Bush said. Pledging the creation of an independent homeland, Bush said "It'll be an opportunity to end the suffering that takes place in the Palestinian territories."

With Israel's occupation of Arab lands captured in the 1967 Mideast war entering its fifth decade, most Palestinians live in dire poverty.

On the last stop of his travels, Bush held a rapid-fire series of diplomatic meetings at this posh Red Sea resort, famous for its brilliantly clear waters and sea-snorkling reefs. After talks with Mubarak, Bush saw Afghan President Hamid Karzai and had dinner with Palestinian President Mahmoud Abbas. On Sunday, he will confer with the leaders of Pakistan, Jordan, Iraq. He said every meeting advances prospects for peace.

As oil prices hit another record high on Friday, Saudi King Abdullah rebuffed Bush's request for higher oil production to take the pressure off prices. The high prices are a political nightmare in a presidential election year for Bush and his would-be Republican successor, Sen. John McCain. Bush said he cautioned the king about the repercussions of skyrocketing prices.

"I said very plainly, I said, `You've got to be concerned about the effects of high oil prices on some of the biggest customers in the world. And not only that, of course, high energy prices (are) going to cause countries like mine to accelerate our move toward alternative energy."

Saudi officials said the kingdom was pumping all the oil that its customers want and that production had been increased by 300,000 barrels a day earlier this month.

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"It's something, but it doesn't solve our problem," Bush said. "Our problem in America gets solved when we aggressively go for domestic exploration. Our problem in America gets solved if we expand our refining capacity, promote nuclear energy, and continue our strategy for the advancement of alternative energies, as well as conservation."

Rather than criticize the Saudis, Bush turned his fire on Democrats back home threatening to kill a $1.4 billion arms sale to Riyadh unless it pumps at least 1 million additional barrels a day.

"One of the interesting things about American politics these days is those who are screaming the loudest for increased production from Saudi Arabia are the very same people who are fighting the fiercest against domestic exploration, against the development of nuclear power, and against expanding refining capacity," Bush said, standing on a manicured lawn overlooking the sea after talks with Karzai.

The president's first appointment was with 80-year-old Mubarak, who has led an authoritarian government in Egypt since 1981. In unusually blunt criticism, Egypt's state-owned press attacked Bush for his speech Thursday before the Israeli Knesset. The media accused Bush of being overly supportive of the Israelis and not mentioning the Palestinians' plight.

"The Torah-inspired speech of Bush raised question marks over the credibility of the U.S. role in the Middle East," wrote Mursi Atallah, the publisher of Al-Ahram, the flagship daily of the state-owned press. "Bush aims to do nothing but appeasing Israel."

Bush, in his address Thursday, showered Israel with praise, strongly reiterated its right to defend itself and only gently urged leaders to "make the hard choices necessary," without mention of concrete steps. He did not visit the Palestinian territories nor mention the Palestinians' plight. He spoke of them only in one sentence saying that Israel's 120th anniversary _ in 2068 _ would see it neighboring an independent Palestinian state.

Bush said Mubarak "wanted to make sure that my approach toward the Middle Eastern peace is firm, and that we work hard to get the Palestinian state defined." Bush said that "I believe we can get a state defined by the end of my presidency, and we'll work hard to achieve that objective."

He repeated those assurances later to Abbas. The Palestinian leader said that "we are working very seriously and very aggressively with the hope that we will be able to achieve this objective before the end of the year."

Bush said he and Abbas agreed on their concern about "radical elements undermining" the U.S.-backed government of Lebanese Prime Minister Fuad Saniora.

"This is a defining moment," he said. "It is a moment that requires us to stand strongly with the Saniora government and to support the Saniora government."

The militant group Hezbollah overran Beirut neighborhoods last week in protest of measures aimed at the group by Saniora's government, a display of power that shocked and concerned the West. The violence only ended when Lebanon's Cabinet reversed the measures and Saniora's government reached a deal with the Shiite militant group, which the U.S. considers a terrorist organization. Bush had planned to meet with Saniora in Egypt on Sunday, but the session was canceled.

SHARM EL-SHEIK, Egypt — President Bush said Saudi Arabia's small increase in oil production will not solve soaring U.S. fuel prices, but he defended the wealthy kingdom Saturday against American...
SHARM EL-SHEIK, Egypt — President Bush said Saudi Arabia's small increase in oil production will not solve soaring U.S. fuel prices, but he defended the wealthy kingdom Saturday against American...
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- truthyguy I'm a Fan of truthyguy 42 fans permalink

"Our problem in America gets solved when we aggressively go for domestic exploratio­n."

Always looking out for his oil company backers. Once Bush is bought and paid for he stays bought and paid for. Not a disloyal bone in his body.

    Favorite    Flag as abusive Posted 07:13 AM on 05/18/2008

"You can't get oil out of a turnip." Peak oil has hit the Saudis, and production has been declining there since 2006. Nothing we do can change that.

Bush could help this country's energy problems by staying home and stop wasting millions of barrels of oil traipsing his entourage all over the world. He should retire to the ranch and cut brush and grub out armadillos. This country can take care of itself.

    Favorite    Flag as abusive Posted 09:51 PM on 05/17/2008
- robeson I'm a Fan of robeson 25 fans permalink
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TEHRAN, May 17 (Reuters) - Iran dismissed on Saturday Saudi Arabia's decision to boost oil output as a "political move" and said any OPEC production hike would only lead to an increase in reserves, an Iranian news agency said.

Oil Minister Gholamhossein Nozari was speaking a day after OPEC kingpin Saudi Arabia, a key U.S. ally in the Middle East, announced a modest increase in output after an appeal from visiting President George W. Bush.

"No, because I think a hike in output will add to an increase in reserves," Nozari told reporters when asked whether the 13-member cartel would increase production as requested by the United States.

    Favorite    Flag as abusive Posted 06:29 AM on 05/18/2008

What's this?

The facts speak for themselves. http://www.theoildrum.com/node/2325 Peak Oil has hit Saudi Arabia and OPEC. They can increase production any time they choose. But they cannot sustain increased rates for very long. They know we Americans have very short attention spans, and six weeks later we will have forgotten to check back to see that their production is right back to or less than pre-bush levels.

    Favorite    Flag as abusive Posted 08:20 AM on 05/18/2008

Talking is one thing. Wringing oil from an empty stone is another.

    Favorite    Flag as abusive Posted 12:31 PM on 05/18/2008
- robeson I'm a Fan of robeson 25 fans permalink
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Why are so many intelligent people (see Krugman) describing the oil price increase in free market terms of supply and demand.

I believe Cartels, are Monopolies, controlled markets. What gives?

    Favorite    Flag as abusive Posted 09:41 PM on 05/17/2008

What gives? Your beliefs are wrong.

    Favorite    Flag as abusive Posted 11:14 PM on 05/18/2008
- ajax2 I'm a Fan of ajax2 24 fans permalink
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Bush was right, appeasement policies with Saudi Arabia have failed miserably.

    Favorite    Flag as abusive Posted 09:37 PM on 05/17/2008
- olephart I'm a Fan of olephart 109 fans permalink

There is no shortage of oil. In April, the WSJ reported that supplies of oil were at their highest levels in 15 years. There is no shortage of refining capacity. Refineries are running below 85% of capacity. There is no shortage of speculators. Speculators hold 25 billion dollars in contracts for petroleum. Hedge funds, large brokerages and big players are buying and selling contracts to one another sending the price up.

Seven years ago the deregulated price of electricity skyrocketed. There was no shortage of electricity, dozens of power plants didn't come on line. The speculators were caught manipulating the price by bidding up contracts between themselves. A few companies and individuals were prosecuted and the price fell back to normal. So it is now. If the Bush Administration actually performed its duty the SEC and other Agencies would put a stop to this and oil would drop $50 dollars a barrel overnight. But this will not happen. The American people have selected a group of individuals who are on the same side as the criminals. This is the Administration of crony capitalism, War profiteering, greed and malfeasance. This is the Administration that fired the Federal Prosecutors who did their jobs with dignity and replaced them with subservient hacks.

That John McCain is even remotely competitive shows that about half of the American people are so mentally deficient that were they on the Titanic, they not only would sell their place on the last lifeboat but would take a check.

    Favorite    Flag as abusive Posted 08:27 PM on 05/17/2008

You have bought firmly into the usual Wall Street investor relations nonsense. First of all, oil prices and inventory levels are not correlated:

http://seekingalpha.com/article/37475-crude-inventories-report-the-more-people-watch-it-the-less-useful-it-becomes

There is zip correlation between inventory and price, right now. And there goes another famous myth.

25 billions in contracts in comparison to a 3 trillion dollar market is less than 1%. Another myth bites the dust.

Electricity and oil have nothing to do with each other. Electricity demand, for one thing, is extremely flexible. It is also an easily renewable form of energy. The two markets are also not strongly coupled.

    Favorite    Flag as abusive Posted 12:40 PM on 05/18/2008
- olephart I'm a Fan of olephart 109 fans permalink

"25 billions in contracts in comparison to a 3 trillion dollar market is less than 1%.

The 3 trillion dollar oil market is based on a yearly basis. The 25 billion dollar figure is based on any given daily trading basis. There are 240 trading days a year so that's 6 trillion dollars in potential trades.

"There is zip correlation between inventory and price, right now.'

Exactly my point!

"Electricity and oil have nothing to do with each other."

I wasn't comparing electricity and oil, I was comparing trading manipulations. I could have used the example of the Hunt brothers and the silver trading scheme they were into.

    Favorite    Flag as abusive Posted 03:06 PM on 05/18/2008
- olephart I'm a Fan of olephart 109 fans permalink

There was no reply button on your last post so I'll put it here.

"How long is the average length of a contract? What is the risk associated with it?"

My brokerage advertises a 7 second completion for a trade. How long a contract is kept depends on the market and the individual. The fact that there are day traders and should give you a clue. The risk associated with trading futures is enormous. A well known "wunderkind" managed a fund in 2006 that was heavily into natural gas futures. The market went south and he lost billions.

"the Hunt brothers went bust and so did the silver market and took most speculators with it."

This was because the Exchange, with the blessing of the Government, stepped in and raised margin requirements. This caused the speculators to bail.

"Enron went bust and stopped gouging California­."

This was because they started enforcing the laws.

"CA still has rolling outages in summer."

This is true however they are not paying 1000% more for their electricity.

    Favorite    Flag as abusive Posted 05:21 PM on 05/18/2008

"My brokerage advertises a 7 second completion for a trade. The fact that there are day traders and should give you a clue."

The contracts we are talking about are not day trades but complex arbitrage. Which makes it actually worse by allowing individual traders to control risk. But the same arbitraging makes the market as whole more volatile.

"The risk associated with trading futures is enormous."

Absolutely no argument there. But how does that affect the American psyche which can't seem to live without over-sized cars and care nothing about double pane window glass?

""Enron went bust and stopped gouging California­." This was because they started enforcing the laws."

What laws are you going to enforce in this case? I have absolutely no problem with more regulation, by the way. I would vote for removing all commodities from trading completely. If you want to buy a commodity, you should have to take physical possession of it. That would completely get rid of the argument that speculators are at the heart of the problem and not peak oil.

What I am simply saying is that even if we did that, the basic fact that we have more demand than supply won't go away.

"CA still has rolling outages in summer. ..."

Average electricity price has not changed sufficiently to reduce demand much, so electricity is still cheap. The difference was never 1000%, anyway. Not even close.

    Favorite    Flag as abusive Posted 11:40 PM on 05/18/2008
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So that's why he went to ask the Saudis to boost production? Because it wouldn't work? Not hardly.

Just more republicon spin as a result of being turned down.

This guy couldn't tell the truth if his miserable life depended on it. He would lie when the truth would serve him better.

    Favorite    Flag as abusive Posted 06:57 PM on 05/17/2008
- Sumocat I'm a Fan of Sumocat 32 fans permalink

"Our problem in America gets solved if we expand our refining capacity, promote nuclear energy, and continue our strategy for the advancement of alternative energies, as well as conservati­on." -- So why the hell are you wasting time trying and failing to get the Saudis to increase supply? If we were actively pursuing intelligent nuclear solutions with properly planned waste management, true solutions for alternative energy, and real conservation, we wouldn't be so beholden to foreign oil.

    Favorite    Flag as abusive Posted 06:17 PM on 05/17/2008

Nuclear energy produces electricity, not oil. There is no easy technological way from electricity to oil. We are not making a whole lot of electricity from oil, so adding nuclear power would do nothing to the oil price. It would make electricity cheaper to the point where utilities would go bankrupt.

I don't know why people buy into this kind of crap, but the mere mentioning of nuclear power and oil in one sentence should lead to uncontrollable laughter in any intelligent person. That is does not is a measure of missing critical thinking skills, not one of the quality of someones energy policy.

    Favorite    Flag as abusive Posted 12:43 PM on 05/18/2008
- Sumocat I'm a Fan of Sumocat 32 fans permalink

I was addressing the idiot's direct quote, but considering your tag is "KillTheMessenger", I guess you don't care about that.

    Favorite    Flag as abusive Posted 10:38 AM on 05/19/2008

Our Rambo In Chief goes begging to the Saudis, and all he got was the bums rush from King Faisal. How humiliating. How does it feel when you lick the kings golden slippers and then he bi%^h slaps you. What was that about being the most powerful man in the world? You not only humiliated yourself with your whining and begging for oil but you also humiliated the rest of America. You should resign, the sooner the better!

    Favorite    Flag as abusive Posted 05:55 PM on 05/17/2008

Ditto !

    Favorite    Flag as abusive Posted 08:14 AM on 05/19/2008
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How many trillions of dollars have we sent protecting that fascist oligarchy. We should have let Saddam take them over instead of fighting the gulf war. At least he wasn't into religious lunacy. He was just a good old fashioned brutal dictator. We definitely would have seen the end of Wahabism, to true enemies of the USA. Both Bush's have sold us out.

    Favorite    Flag as abusive Posted 05:50 PM on 05/17/2008

I am sorry, but YOU VOTED for them TWICE. Democracy is not an automatic replacement for common sense.

    Favorite    Flag as abusive Posted 12:44 PM on 05/18/2008
- BC33 I'm a Fan of BC33 2 fans permalink

Its most frustrating to those of us the didn't vote for that Moron in the White HOuse. I never voted for Reagan, Bush 1, or Bush 2 ( the Idiot)! But yet I am deal with what bad shape this country is in because of their administrations.

    Favorite    Flag as abusive Posted 01:33 PM on 05/18/2008

As the price of oil and gas both are fixed on the futures markets you can pump oil till the cows come home and the price will not go down. I now live back in OK. and the pumping and drilling is going on faster than I have ever seen it. Oil Company's are crying for people to work in the fields. Pay runs from about $12.00 per hour to $25.00 per hour. At 12 hours a day with time and a half for over time figure it out. My Son has work the rigs for 15 years and never had it so good. Watch the smoke and mirrors.

    Favorite    Flag as abusive Posted 05:43 PM on 05/17/2008
- vippy I'm a Fan of vippy 71 fans permalink

True, currently the countries are swimming in oil. Iran ran out of storage facilities and now stores their oil offshore in tankers. However, our refineries say they don't make money and they have
closed 2 refineries, one in Beaumont and one in Illinois and the rest work at 86% capacity.
Go figure. However, on Sunday the Dallas Star Telegram will have an article by Ed Wallace who has done research and he ties the oil prices with the housing due to one little law coming from
Texas. Apparently, the wife of Tom DeLay and some lobbying money is also involved.
Can't wait to read the article tomorrow.

    Favorite    Flag as abusive Posted 07:04 PM on 05/17/2008

The price is set by how much the highest bidder will pay to get their hands on gas and mineral oil products. In Europe they are willing to pay up to $10/gallon. I would not expect Americans to start conserving seriously before the price of gas exceeds that number by far. Personally, I can spend $500 on 20 gallons of gas a month (that's all I need to drive my Prius). So in effect, as a consumer, I can drive the price for gas easily up to $500/20 gallons = $25/gallon. And I will.

    Favorite    Flag as abusive Posted 12:48 PM on 05/18/2008

IN 2003 it was reported in the Guardian/UK the Saudis' were trying to get nukes for a deterent to other ME States aquiring them (ie:Iran). Now Bush, after being told NO to more oil output to bring our gas prices down, is giving MONEY and TECHNOLOGY to the SAUDIS for "nuclear power". ??????

Iran can't have "nuclear power" but the samr folks who took down the Twin Towers, we are GIVING it to them?????

God help us.

    Favorite    Flag as abusive Posted 05:40 PM on 05/17/2008
- mheister I'm a Fan of mheister 52 fans permalink
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Um, Bush has had seven years now to work on the problem on the US side. Promoting conservation by toughening fuel economy standards, promoting solar and wind by offering the same kinds of tax breaks he's lavished on Exxon-Mobil, putting more R&D into other alternative fuels (ethanol from corn oil is a scam), dropping the tariffs on sugar-based ethanol from Brazil, maybe approaching the Hugo Chavez situation the same way Reagan approached South Africa - constructive engagement­.... all amongst the myriad of things Bush did not do.

And now that chickens are busy at home roosting, now he's whining we need to do more at home? And we need more help from the Saudis? Pathetic. The US lazied and mismanaged and corrupted and de-democratized and overconsumed and overpolluted and wimped (I'm looking at you, Democrats who didn't stand up to this failed-oilman mental midget) itself into this mess, and it's going to take hard work and shared responsibility and a bit of pain and sacrifice to claw our way out of it.

The good news? West Virginia and a few knuckle-dragging racists notwithstanding, we seem, as a nation, to be waking up.

    Favorite    Flag as abusive Posted 05:27 PM on 05/17/2008

Win/Win for Bush and for Saudis. No extra oil for America, no Democracy for Saudi Arabia. Just a friendly visit by our Chimpy in charge.

    Favorite    Flag as abusive Posted 04:38 PM on 05/17/2008

When will people realize the Saudi's can't increase oil production. There's not enough oil left in the ground. The Kingdom hasn't produced an accurate field report in decades. They keep hedging saying its not necessary. I guess when they run out and go "oops", we'll really be in trouble. It's just postponing the inevitable. A dry dust bowl of a country.

    Favorite    Flag as abusive Posted 04:29 PM on 05/17/2008
- AllenD I'm a Fan of AllenD 36 fans permalink
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Wow, someone who gets it! When will the politicians level with the American people about the realities of peak oil?

    Favorite    Flag as abusive Posted 05:19 PM on 05/17/2008

Peak oil is the 800 lbs gorilla in the room. Don't expect people to look at it. It's way too scary.

    Favorite    Flag as abusive Posted 12:49 PM on 05/18/2008
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The Opec countries are giving us the middle finger - and who is to blame? BUSH and CHENEY. No more GOP's in the white house - The rest of the world is watching the USA being sucked under by this moron, AND now his siamese twin tweedledee is set to take us through another 4 years of the same.

    Favorite    Flag as abusive Posted 04:02 PM on 05/17/2008

JFC!!!!!!!!!! Let's blame the democrats for our high prices since they won't let me rape america and have my way. Of course Darth Cheney didn't have anything to do with these plolicies. And the stupid F&**%ng americans that are now bitching about 60 bucks or more to fill up their tanks are going to vote for McSame....­.......

    Favorite    Flag as abusive Posted 05:24 PM on 05/17/2008

You do realize that OPEC is close to peaking, right? Well, maybe not. But once you do, you will notice how childish your ranting is. OPEC can't sell to you what they don't have. At any price.

    Favorite    Flag as abusive Posted 12:51 PM on 05/18/2008
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