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
Loading comments…
Want to reply to a comment? Hint: Click "Reply" at the bottom of the comment; after being approved your comment will appear directly underneath the comment you replied to
$100 a barrel, almost, and people are still not trying to change their lifestyles, just the cost of gas at the pump.
Move your family to situation where you don't have to drive them all over the place. Start a home-based business or move near your job. Young people who don't really need cars, who can ride bikes, walk or take mass transit.
There's so much people can do to change our consumption --and the U.S. economy. There was a time when the Republicans had the public believing that using alternative forms of energy was actually bad for the economy. People bought it, hook, line and sinker.
Now with the emergence of the weak U.S. dollar, our infrastructure failing, and two mis-conducted, mis-managed wars going on (taking away from our society's priorities and REAL security), do you still think it's impossible for you and your family to change?
This is what should have happened 30 years ago, and people are still willing to drive us over the cliff because of denial.
Look on the bright side. In Iraq, the oil co. executives in the white house are paying their oil co. friends cost plus contracts to pump and ship the oil. They keep the profits from each direction. The money and power are shared and only a few Americans have to die. Who follows the selling of the Iraqi's oil?? Who follows the money? Coincidence, I'm sure. Cheney still gets payoffs from the co. that he nearly bankrupted as ceo. It's only naked capitalist aggression.
It is all supply and demand and not a conspiracy. The Chinese and Indians are increasing demand for the product, supply is stagnating, and the US dollar is depreciating -- all this comes together to increase the US$cost of oil.
You time would be better spent encouraging a shift to nuclear energy for electricity to France's 80% level and then push for electric cars like GM's former EV1.
So, why are we spending all this time worrying with Iran. Invade Saudi Arabia. Bush can explain it to the royal family. After all what are friends for? We just need to control a little more of the world's oil so we can bring the price down enough not to totally wipe out the dollar. Our troops ships and aircraft are already in the area. We would have a much higher return on military resources expended in Saudi Arabia.
Of course, the current occupant would find a way to screw this up as well.
A good portion of the current run up in oil is the result of speculation on the effects on production and distributions that an attach on Iran might have.
Bush. Bush. Bush. That word will echo thru eternity and become synonymous with catastrophe. Funny how until peak oil hit everyone thought we won the Cold War. Now that Russia is the world's largest oil producer and quite probably has the largest reserves, your in the know Saudi Aramco employee aside, now you will see who the superpower is.
Oh, but the Saudis are such good friends of the US!!!!! Thanks George. And thank your father, too.
Mr. Leary, or Mr. Hearsay, is so off the mark. Instead of tacking the United States' addiction to oil, he seems to hold that the Saudis or anyone else for that matter have an obligation to sell their resources for your benefit. Nothing could be further from the truth. The beauty of an Hugo Chavez or an Evo Morales is that they are using their resources for their people's benefit, not ours.
Consider this argument. Let's say Saudi Arabia loves to buy wood from America's forests. They love it so much, they buy it as fast as we can cut the trees down. Do we have an obligation to deplete our resources as quickly as possible because they can't control their demands? Likewise, why should our oil gluttony be Saudi's problem?
If we took care of that problem, we wouldn't have to worry about what Saudi is doing. But because we have an incoherent energy policy and an insatiable demand for oil, and politicians who are too cowardly to enact policies that force us to cut back our usage, we will remain at the mercy of OPEC. And it is asinine to expect them to cater to our needs before their own.
Robert Rapier
Mr. Learsy....
1,000,000,000 is a BILLION!!! not a Trillion.
Please get used to using a trillion..
That's a trillion..
Interesting analogy using Canada's theoretical diversion of water from US rivers to a Great Lake. Seems like we already have the trophy for resource aggression with the way we've more or less ensured Mexico gets nothing of the Colorado River that once supported a vast and diverse ecosystem at the mouth where it dumped into the Gulf of California. Would Mexico be justified in maybe taking aggressive action against us for that transgression?
Where do you get your information about Saudi Arabia regarding their "vast" oil reserves? No one knows what they have that is actually proven. They nationalized their oil resource and effectively cloaked their entire oil industry in a vail of secrecy. They also have heavy crude in abundance and not light sweet crude which is what is best suited for refining into gasoline and other fuel related products. Instead of barking at oil companies with your imagined conspiracies why not advocate getting corporate USA to embrace improved fuel efficiency that is at least as good as what European cars enjoy. That would be taking a meaningful step in reducing the chest beating hot air I read in your column and doing something that will help wean us off OPEC. It is either that or we demand ourselves into $5 and up gallon gasoline.
Hey! That's OUR oil under the Saudi sands!
Being that I'm a peak Oil Prankster, the world's crude oil production figures once again prove me to be correct: Saudi Arabia has peaked. The water cut in the Ghawar oil field (world's largest) is increasing daily. World oil supply continues to fall. World oil production peaked in May, 2005.
No ad hoc, over-the-top reserve estimate pronounced by an Aramco employee is going to change the fact that global oil production is in permanent decline.
Well, this makes the case for me.
After we subdue Iran, our next target in the President's hit parade should be that empire of naughty Arab princes in Saudi Arabia.
Given our great successes in Iraq, both of these militarily puny lightweights will prove to be slam dunks. I wouldn't doubt the citizens of those two countries will greet our heroic troops with roses and loving banners to Bush.
And the really beautiful part, we can use their oil revenues to rebuild whatever infrastructure we accidentally destroy on the way in, just like we're doing in Iraq!
It's a real win, win, all the way around.
So far 4 refineries are shut down. Ergo we have too much gasoline. Drive only the speed limit and watch inventories rise and price drop.
But those we no money just drive without thinking. Let us all fight back! I read somewhere that the refineries don't make money,
is it because we are using much less than what they actually tell us? The fact that Bush mandated only 1.8 mpg increase in fuel efficiency shows that he wants to keep us on the oil tit!
"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."
But, let's imagine for a second, that Canada knows that we have enough water that we could get from our own sources, but refuse to use it because we don't want to "spoil" our environment and prefer to continue the present use of other's resources?
Wouldn't it then make sense that these "others" would say, okay, you can have ours, but you're going to pay through your nose for it!!??!!
Or, shoud be continue to be the "Imperialists" and "Capitalistic" pigs that we are known to be and ravege these other countries resources for the safe keeping of ours? And, complain about their nerve wanting to profiteer from our sucking up of theirs? Come on!
Where's your liberal sense of compassion and fairness?
**********
SHE A FAKE
HE'S CASANOVA
THEY'LL TAKE THE COUNTRY AND SCREW IT OVER!
I hate to be this picky, but it's required here - while I agree with your basic premise, the headwaters of both the Mississippi and the Missouri Rivers are within the United States.
You must be logged in to comment. Log in or connect with
