As Oil Approaches $100, is Saudi Arabia Waging Resource Aggression Against the American People and the World Economy?!
Imagine waking up to the following nightmare headline "Canada Interdicts the Head Waters of the Missouri and Mississippi Rivers and All Water Flows From Its Territory Into the Great Lakes." One's reaction would not be passive nor that of our government to such a blatant act of resource aggression. And if you permit a glib interjection, any argumentation that , "well its water on their side of the border" would hold no water whatsoever. The deterioration of relations between the United States and Canada would be immediate, grave, and threatening.
Yet in degree, this is the current status of our resource relationship with the Saudis. Consider the following. On March 5, 2007 in a first page article "Oil Innovations Pump New Life Into Old Wells", the New York Times reported that Nansen G. Saleri, the head of reservoir management at the state owned Saudi Aramco reported that Saudi Arabia's total reserves were almost three times higher than the kingdom's officially published figure of 260 billion barrels. He estimated the kingdom's resources at 716 billion barrels. Mr. Saleri continued that he wouldn't be surprised if ultimate reserves of Saudi Arabia reached a trillion, (1,000,000,000,000) barrels!
This amazing revelation coming from the reservoir manager of Aramco underlines the degree to which the Saudis have perverted the current world oil market. The Saudis are the putative leaders of OPEC and their capabilities and objectives determine OPEC's policy goals. It is clear as the International Energy Agency phrased it in their recent report, "The greater the increase in the call of oil and gas...the more likely it will be that they will seek a higher rent from their exports and to impose higher prices ... by deferring investment and constraining production."
Saudi Arabia, given its enormous reserves, could readily produce significant additional quantities of oil in order to abate the steep run up of oil prices. At these price levels the fact they and OPEC are maintaining the major portion of their production cuts made at the beginning of this year (OPEC's production cut of 1.7 million barrels/day altered by a production increase of only 500,000 barrels/day starting this month) is smoking gun evidence of their extortionist intent. By holding oil off the market, oil which they clearly have in ample supply, they are gouging the world's economies, pricing their product at levels that have no market rationale whatsoever. They are preying on the world's need for oil. It is an act of resource aggression against the world's consumers much as Canada's hypothetical interference with the headwaters of our major river ways would be an act of aggression against the United States.
Please note in my title I referred to waging resource aggression against the American people. The government was not mentioned because in this imbroglio our administration is in effect Saudi Arabia's, as well as OPEC's and the oil patch's greatest ally. In the near seven years of its Presidency, virtually nothing has been done to constrain Saudi Arabia's policies. On the contrary our President and Vice President are so wedded to the oil industry's interests that the enormous increase in oil prices during their tenure can well be ascribed to willful lack of any forceful policies to counter the Saudi extortion. This has manifested itself in many ways.
Let me just cite a few:
- In the near seven years of the Bush presidency, virtually no serious steps have been taken to significantly abate demand for fossil fuels;
- The nations Strategic Petroleum Reserve has been used to underpin escalating prices by continuing purchases even as prices exploded, thereby signaling the governments acceptance and approval of these price levels, and worse by declaring the doubling of the Reserve just as crude oil prices were retreating to $50/bbl earlier this year.
- Neither through "friendly persuasion" nor as a Dutch Uncle, making Saudi Arabia understand its price and production policies are intolerable. This even though we are in essence the guarantors of last resort of Saudi Arabia's independence as evidenced by the some $100 million dollars a day being expended from this nation's treasury on our naval flotilla stationed off the Saudi Coast in the Arabian Gulf- thereby serving as a bulwark against Shia Iran that without our presence would have designs and capabilities against Sunni Saudi Arabia;
- By the fawning obsequiousness our high government officials have shown toward Saudi officialdom, (see "The Price of Oil, OPEC and Our Laws and Now Welcome to Vichy" 5.4.06) or be it Price Bandar's open access to the Oval Office while he was Ambassador in Washington and thereafter.
- Or as exemplified by the symbolic holding of then Price Abdullah's hand at the Crawford Ranch meeting (see "Cheney in Saudi Land, Don't Hold Abdullah's Hand" 01.16.06; and "President Bush's Most Respectful Letter to King Abdullah on Energy Cooperation" 06.22.06 ) whose coziness resulted in an almost immediate upward ratcheting of oil prices.
The administration's oil industry buddies are ecstatic at the windfall the entire oil sector has reaped by the quadrupling of oil prices to levels undreamed of before the advent of this Presidency, while many of the nations citizens are having their household budgets ripped to shreds in order to meet their home heating bills this coming winter. Rarely if ever in the history of the Republic has there been such a divergence between the nation's interests and those of the vested interests that formed this administration.
Raymond J. Learsy is the author of the newly updated Over a Barrel: Breaking Oil's Grip on Our Future
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Our genial blogger to the Saudis:
"Hey guys, why do you sell a kidney for $5k when you can send two for $2.5k a pop?"
Now on a more serious note. The Saudis have the interest to sell the smallest amount of oil for the largest amount of dough. And if this causes our economy to limp, great. USA is on sale and it is cheap. The Saudis have huge amounts of petrodollars in US companies and this will continue for years to come. The truth is we don't even have a clue how many billions/trillions they have invested and where because our numbnuts prez doesn't belive in market oversight, especially when it comes to hedge funds and such. Meanwhile, they do care about what book you loan from your local public library. Go figure!
lets do this also. lets fill up the same size barrel with food stuffs, such as corn, wheat, soybeans and sell it to the saudi's for $100 per barrel. i mean, they can't eat their oil and we are the bread basket of the world, or use to be. i can go without a car longer than i can without food.
then go after the f'n oil companies and their execs. 20-40 billion in profits per quarter. When is enough enough. we need a huge windfall profits tax on these f***s.
Saudi Arabia is sellling more oil than ever, as is the rest of OPEC. It is called Peak Oil.
Learsay's analogy is dead wrong. It should be thus.
Canada told the US it can't take anymore water than it always taken , and that it can't siphon off the Great Lakes.
Learsay refuses to admit there is Peak Oil. Just about every country in the world is now past peak production. Ourselves, Mexico, the North Sea , Venezuela, most of the OPEC members and very soon Russia.
There hasn't been a major find in 30 years, and the prospects don't look good that there will be one.
Get ready for the resourse war rhetoric , oh , that's right we are in Iraq!
The Executive branch has fostered an atmosphere, around the world, that the U.S. is not to be respected.
Our economy is slipping. Our military is over extended and not the overall calibre it once was. Our image of a leader of Democracy has turned to a powerful nation that consistently takes "the low ground". Our leaders are not respected, not trusted, and hated. We show ourselves incapable of stopping gross corruption in the U.S. and, prominantly on display in the Iraq debacle.
The world can see that our President can trumph our elected congress and the overwhelming opinion of our citizens and there is no consequence.
Why would any country, government, or faction have any reason to respect or admire us? Why would they not take every opportunity to take advantage of our country?
Per usual, of all the posters, only one has actually done a damn thing to reduce the dependancy on oil.
Pissin' in the wind isn't going to do it...but action will! I have said before that I went off the grid 16 years ago and have never had reason to look back. My costs for a solar panel/wind combo was less than $3000.00 Exactly the cost my local power co-op wanted to cut down most of my oak trees and run lines in to my studio. They also wanted me to become a member of the co-op for a fee and pay a mandatory monthly of $7.50 if NO power was used. Now it's $20 a month and current users are blessed with more add ons if they dare turn on a light.
I also use storage tanks and small DC pumps for pressure. All my water comes from the sky or the river and there is more than enough to shower every day. But I don't spend 45 minutes in the shower. Hot comes from a home brew heater and waste goes to a collection tank with a solar powered "cooker". After 16 years the solid powdered waste has filled 3 5-gal buckets and has made my flowers very happy.
I don't miss $200 power bills at all and my amortized cost over the last 16 years has been $14.58 a month. Agreed, soon I will have to replace my battery for the third time...that will add $360.00 to the cost, but most of you are paying that amount every month. I pay that every 7-8 years.
I am a home builder and try to educate my clients on the benefits of being a bit more green. Most like the lip service and then opt for the extra large heated garage to house the twin Hummers and his and hers Harleys...sigh.
Ok, you ARE the genius here, so why do you persist in this kind of finger pointing, blaming people who will do what is in their own interests, and not pointing out that we americans WILL NOT do what is in our interest if it means getting off our asses?
It strikes me that this whole conspiracy you speak of has been going on since our own oil peaked back in the late sixties, and we HAD to start buying from the brown peoples.
Get over it. Change your lifestyle. Re-Build the Rail roads. Marshall-plan alternatives.
And BEFORE demand destruction begins, get a bike!
Looking at this chart...
I wonder what changed in the 70's to cause such a steady upswing of prices?
Of course we already know what happened in 2002 to increase it even more...
http://www.fintrend.com/inflation/images/charts/Oil/Gasoline_inflation_chart.htm
I think blaming the arabs is premature when there was such a radical shift in 2002 when our leadership changed. That's what we need to be investigating and questioning.
Here's a question? How much would a gallon of gas cost if our currency were worth what it was in 2000? Back then a $ was worth 1.15 Euros -- now a $ is worth .69 Euros. The dollar has only 60% of the purchasing power now than it did 7 years ago. Or to put it another way the dollar had 166.67% more purchasing power back then. Assuming gas at $3.00/gallon now, if the dollar had the purchasing power it did in 2000 gas would cost $1.80/gallon.
Wasn't it George Bush the candidate in 2000 who when asked how he would handle the high cost of gasoline smugly answered he would just pick up the phone and call the Saudi Prince and tell him to turn on the spigot. That was when gas averaged $1.61 a gallon and oil was at $35 a barrel. I think the call is way overdue.
"Saudi Arabia, given its enormous reserves, could readily produce significant additional quantities of oil in order to abate the steep run up of oil prices."
So explain why Saudi corps should lower prices when US corps bone the consumer a$$ every chance they get.
I am by no means a fan of the Saudi regime, but before you look for scapegoats how about sweeping your own doorsteps.
I.e. if you haven't noticed, the dollar has dropped dramatically vis a vis all major currencies in the last few years.
The result is that the "real world" price of oil has risen far less dramatically than its increase mesured only in dollars, and is mainly the result of a larger demand, (and chaos in Irak) not a conspiracy to distabelize anyone.
we need to invade saudi arabia!
why invade Iran and make a mess when we can invade Saudi Arabia?
while we are at it, why not just annex every oil field on the planet because it's in our 'national interest'?
and be sure to give the 'management' contracts to haliburton!
we do rule the world, right?
Mr. Learsy is a Peak Oil denier, which means he is delusional, which means most of what he says can be discounted out of hand. The few times he makes sense must be parsed from his usual mountain of bias and B.S.
Welcome to Peak Oil, folks. Hope you're ready.
SM Montaigne
Sauds play chess.
George W plays pin the tail on the donkey.
They've bought him, they own him.
We pay for it.
Sick, huh.
Hmmmm.
I have a problem with your analogy. The Great Lakes are a shared resource, but the oil under Saudia Arabia is UNDER Saudi Arabia, far far away. It's theirs alone. We have zero claim on it. Because we offer them military support in exchange for their generosity does not change the fact that the oil is THEIR resource.
And, you know, free market and all that.
The rest of the world pays more for their oil, for various reasons. Perhaps we'd have more respect for the negative consequences of our oil gluttony if we paid more for it.
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