Bush's Hypocrisy, OPEC's Arrogance, The Oil Mess We Are Living

Yesterday's New York Times had a front page article "President Fails to Budge OPEC on Production." In its inimical manner, the Times reported OPEC's rebuff to the president's pleas to OPEC to increase production in the straight-faced uncritical manner, visiting on us with what could have been an OPEC flack handout. You see it isn't OPEC's fault, it's the dollar, it's the speculators, it's the troubles along the Venezuelan/Columbian border, mismanagement of the U.S. economy and quoting that weighty disinterested observer of oil patch machinations, none other than Rex W. Tillerson, chairman and CEO of Exxon Mobil, who calmed us down by assuring us that the "The market continues to be well supplied. There has been no interruption in supplies." Well, feel better now? Especially those having the good fortune to be pumping gas at the Americo gas station in the town of Gorda along coastal California where you can get uninterrupted supplies of gasoline at $5.19 a gallon regular and $5.39 for premium.

The New York Times article informs us that we, and our dollar are primarily to blame for the current vertiginous oil prices. Why, in the past year alone "the dollar has lost 17 percent of its value against the euro." No mention, of course, that in January of 2007 the price of oil touched $50 a barrel, thus making the increase in price since some 110%, a long way from the 17% being trumpeted by the New York Times and OPEC flacks. By the way, if you are doing your sums, a 17% increase compensating the fall of the dollar's value on the January 2007 price would bring prices to $58 a barrel, not the $104/bbl we have today.

And then of course the Times goes on to applaud the Saudis for steadily producing 9.2 million barrels a day "day in and day out" to keep the market "well supplied." No investigative journalism here to determine what the Saudis could produce at full tilt. Most likely well in excess of 10 million barrels a day, and given what indeed we know about a modest estimation of their reserves (more than 260 billion barrels and probably closer to 700 billion barrels- see comments by N.G.Saleri head of resevoir management at state owned Saudi Aramco "Oil Inovations Pump New Life Into Old Wells" NYTimes,Mouawad 03.05.07) they could continue doing so for well over a hundred years.

As for the patent nonsense that the "mismanagement of the American economy" is to blame for high oil priceas suggested by Chakib Khelil , Algeria's oil minister and OPEC's president, is a bit like saying our customer has experienced a train wreck so let's charge him all the market can bear. It makes no sense at all.

As to the speculators, yes ,they play a role, but no mention of who is speculating and why. But to allow the comments by Saudi oil minister al Naimi that "Today there is no link between oil (market) fundamentals and prices" as reported by Morocco's Ashraq al-Awast, boggles the mind. More on this in a future post.

But wait, wait. We have also made our contribution to this clown's "mise en scene." As star player on our team is none other than our President Bush. His starring role has been fashioned by the following lines recited earlier this week and quoted by Reuters "Bush urges OPEC to weigh pain of high oil prices" 03.05.08: "My advice to OPEC -- of course they haven't listened to it -- my advice to OPEC is understand the consequences of high energy prices, because I do," Bush told reporters. Wha??

This from a President who --

- Who has seen the price of oil quadruple under his watch while doing virtually nothing to counter this vast increase.

- Has done virtually nothing to abate demand for fossil fuels during his presidency including the mandating of truly meaningful mileage standards for cars.

- Pushed Iraq to rejoin OPEC as practically the first order of business after the removal of Saddam Hussein.

- Never in a meaningful way caused OPEC to moderate their aggressive pricing policies.

- As the price of oil was slipping below $50 barrel, came to the oil industry and OPEC's rescue by announcing a policy of doubling the Strategic Petroleum Reserve (STP) in January 2007.

- Continuing to fill the STP irrespective of price causing the likes of Frank Verrastro of the Center of Strategic and International Studies to exclaim this past week that if the White House was truly interested in lowering oil prices it would stop sending crude oil into the STP. "If you're begging people to put oil on the market why in the world are you taking it off?" Verrastro said, while probably scratching his head.

- Appointing as Secretary of Energy a likeable but untested personage as Sam Bodman whose naiveté on how things work caused his Energy Department to respond to criticism about continuing filling the SPR even in the face of President Bush's comments by saying "reserve shipments are miniscule." Thus they betrayed a total lack of understanding of how markets function, exacerbated with Bodman's simplistic comment "Look, the price of oil is set in the trading rooms in New York and London and Tokyo and Frankfurt and all around the world". Bodman continued, "Whatever it is, it is." No comprehension whatsoever that the United State by word and deed as the largest consumer of oil by far in the world, had the means to influence the mind set and temper of those "trading rooms." That, as we have learned most every day, prices are influenced by strikes in Nigeria, border incursions in Iraq from Turkey, storms in the Gulf of Mexico and fog along the Houston Ship Channel, skirmishes in the Persian Gulf, Middle East political disequilibrium, the list is almost endless. Yet here is our Department of Energy, as usual, asleep at the switch.

If President Bush means when he says he understands the consequences of high energy prices is that his friends in the oil industry are doing fabulously well and the oil companies are raking it in and that OPEC is setting up Sovereign Wealth Funds to buy America, well then, he hit the nail right on the head. As for the rest us, I think we understood a long time ago what he really means, by what he claims to understand when it comes to oil prices.

Comments

[biglover]

When George Bush took office in 2001 gas was $1.42 cents per gallon. Here in California it is (in a lot of places ) over $4.00 a gallon.

I would say that this administration of oil men can truly claim MISSION ACCOMPLISHED.

If I were the dems, I would have those figures rolling at the bottom of all of their political ads from now on.

[biglover]

The price of gas when George Bush took office was $1.42 cents per gallon. 7 years later under the oil men administration gas is over $4.00 a gallon here in California.

I would say that this is truly their 'MISSION ACCOMPLISHED" . I think the dems should roll those numbers on all of their ads going forward, among other things.

[PacificGatePost]

The current non existing oil strategy isn't healthy and as has been stated elsewhere in these comments, America's administration has not extracted any quid pro quo from Kuwait, Saudi Arabia & UAE for having so effectively protected their oil fields, their palaces and their lavish life styles.

It is high time alternative mindsets were exercised new strategies put into motion:

http://pacificgatepost.blogspot.com/2008/02/yyyyyyyy-yyyyyyyyy.html

Doing so will reduce the size of the looming threats to the freedom we all know and love. Those trillion dollar funds American dollars have created from the consumption of oil are retuning with hooks on them:

http://pacificgatepost.blogspot.com/2008/02/america-for-sale.htmll

Let's not let those hooks SET. Is Congress paying attention? Rules need to be set and implemented.

[Peps]

Wow, just wow.

This may be the worst and most uninformed blog entry concerning oil I have ever read. As another poster said, please visit the oildrum.com and other oil/energy websites and get informed.

Really...just wow.

[JacobSinger]

Wow, just wow...I've never seen a blog entry that was so obviously made by an oil company shill; you might want to take a different tact there, Peps, if you want to actually be sucessful in BSing anyone here today.

Don't feel too bad about being outed; Learsy's articles are always mugged by oil company shills, and your efforts are just a little too obvious....

[Peps]

I posted a reply to this but I guess it didn't go up. Rather than type it all up again, just go to the website I mentioned (as others also mentioned) and read up for yourself.

Here's the highlights:
- Oil is a finite resource and one which is at or nearing its peak in production
- Oil demand is relentless, cheifly driven by developing economies
- In addition, many countries that will formerly reliable suppliers to the world market (not just OPEC btw) have seen their production peak and/or their domestic demand increase substantially. In either case, you get a net drop in supply to export markets. Mexico is a good example and one that should be of concern to the US.
- Speculation, exxhange rates and other similar factors have predominant influences on the short term price runs and volatility. The long term price trend is clear however and is dominated by factors the author of this post didn't mention
- By not mentioning those factors (demand vs supply, production rates, refining capacity, EROEI of extraction for hard to reach sources, unconvential oils vs crude, mercantilism, etc.) the author is distracting from the real issues here. This doesn't help us come up with lasting solutions to deal with supply constraints AND addictive oil culture that is so pervasive and hard to whip

Bush Co et al are definitely deserving of blame as mentioned, as they defintely have not done enough to help the US relieve or even grasp the scope of our oil addiction. Perhaps on that point I was too harsh on the author, for that I apologize. It justs irritates me to see us not focusing on the real issues as I am in the energy business where my role is essentially to help companies, municipalities, hospitals, etc., to reduce their use of fossil fuels and other forms of energy (water, electricity) to help save money and the environment. Hardly the type of work that would classify me as vested in the oil business.

Heh, trust me, nobody who was an "oil shill" would recommend the oil drum.

[JacobSinger]

Market manipulation--by every faction involved in the process, from the drilling companies to the refiners [who are clearly artificially manipulating the price before it could actually effect gas production]--is responsible for this horrendous rise in gas prices.

The really disgusting part of this equation is, not surprisiingly, provided by the MSM; we've been steered toward the concept--slowly, beginning at the end of 2007--to get mentally ready to pay these prices.

I do wonder what it will take for the American people--particularly the younger ones among us--to stand up and call BULLSHIT on the US government, the corporatists and all the other factions that use us like oblivious tools to build their profits.

[NickAdams1917]

I feel so decieved. Why didn't anyone warn us that oil reserves were going to run out.

[biglover]

Why would they? Are you sure you don't want to ask a different question?

[Sundialsvc4]

As atrocious as it may be to pay these kinds of prices for fuel, I think I would rather see this nation pay them... right until it dawns on Everyman that he literally cannot afford to pay them... if it will cause the nation to stop drinking poisoned kool-aid from the White House (et al...) Cup.

If it takes $12 a gallon at the gas-pump and abandoned big-rigs parked on the Interstate highways to make the word "impeach" cease to be unspeakable, then some great good will have been accomplished, albeit at grievous cost.

The criminals who have infiltrated all three Branches of this Government have absolutely no regard for what is only superficially "their" country. You've heard about "Gold Fever?" These guys can raise their hands, thereby spend $500 billion, and tens of millions of dollars of "all that money" flow right into their bank accounts -- as if they "need" more, of course, but when you're both greedy and sociopathic, "need" has nothing to do with it.

At some point, and long before(!) November, the word "impeach" must be put on the table. The President of the United States is a War Criminal. Unfortunately, a great many of our Senators, Congressmen, and Justices are war-criminals too. But in the final analysis, there are only less-than-a-thousand of them, and more than 320 million of us. It's going to come down to that, and it just might be "$12 a gallon gasoline and abandoned eighteen wheelers" that finally brings "impeach" back into the American vocabulary while there is still time to do so.

[castlerider]

A real problem as another commenter suggested is the education level of this country that people could be such morons to have voted for BUSH

Never mind about the fact we all know, and jnow too well that had Al Gore won, or been allowed to win in 2000 the price of gas would now and still be probably no more then 1.50 at the most!
There's no way it would be more then that, with the fact that Gore would have made automakers give us cars with better MPG, and strongly stressed better and other alternative forms of energy, making OPEC work harder and have to compete more for the business.. Not only that, not been afraid to take oil companies to task so they could be happy to get what they get as patriotic American companies, not greedy bastards that have a president who looks the other way whenever he is asked to.


It's idiots like that who would actually rather have it harder on their own selves then wise up for the sake of letting all of us actually live better.

it's the real problem with Trolls, neocons and rightwingers- they are absolutely total morons. And actually really do belong in no greater intellectual places then bathroom stalls

God help us whenever they do get in a position of leadership

[timeforachangenow]

HuffPost's Pick

"God help us whenever they do get in a position of leadership"

I hate to be the bearer of bad news....but....TOO LATE.....8(

is it TimeforachangeNOW...yet???

[castlerider]

The very worst of it is that we have a president who looks the other way when big businesses ask him to.

Case in pont the fact that here we are trying like hell to survive these awful changes while we notice that EXXON MOBIL , an AMERICAN corporation, has been reporting record profits for the last 3 years.
What's wrong with this picture?
An incredible, unbelievable and indifferent lack of leadership. In a word, BUSH.
Ok, 2 words- BUSH & CHENEY. Note how the greed factor seems to rear its ugly head in the background when the other idiot's name is mentioned.

It's so shameful that we are where I cannot even help my daughter who just got her first car in buying gas anywhere near like I would be able to, or see her as free as I was when I first began driving.
I know things are much worse for many families, and its all absolutely criminal what these corporations and this president has done and is doing to this country.

[brooklyncitizen]

HuffPost's Pick

It is criminal....there were a lot of shennigans in Alaska as well; lines that were not kept operational to force a scarcity and govt officials bought off to allow this and look the other way. About 4 years ago an oil industry watchgroup reported on the dissatisfaction of workers in Alaska with the working conditions caused by the neglect of some of the pipelines.

THat year Exon reported its first record profit and it's only gotten better.It's also when we began to slip above $50/barrel .

Lastly, Bush's animosity and stupidy have created a problem with Venezuela an important oil country. THere wasn't a problem with Chavez until Bush decied to have him "eliminated"/diposed of for speaking out against the Iraq invasion.The rest as they say, is history.

[castlerider]

I don't understand why you were picked by blog central and not the letter you reffered to, but that's ok, no biggie. Check this out-

Listening to Hightower radio on kpft.org, (Pacifica- comes on at 8:58 AM eastern time.) he made mention of a fact that is very pertinent-
The Exxon Valdeez dumped 11 miliion gallons of crude in Alaska at Prince William Sound 19 years ago, and devastated the economy, a bpristine eco-system and fishing livelihoods, practically everything. The people of this area sued Exxon and won a judgement of 5 Billion dollars.
Exxon appealed and has been in litigation over it ever since then! Yes, they have spent millions trying to clean it up, but you cannot ever clean a mess like this completely, you cannot fix what they have literally destroyed, livelihoods of many and a life that was prospering and that cannot be replaced, not to mention the pollution that has decimated all the fish wildlife that was there, even to now, 19 years later.. ..
Last year Exxon reported 40 billion record profits. Do you think they even considered paying the 12.5 percent of this so they could finally get this behind them, and let these people try to get on with there lives?
No, and hell no! They have not only had their payment judged on and significantly reduced, they are taking this all the way to the Supreme Court, paying their $600 an hour lawyers to make sure they never pay a penny, and with Bush's Supreme big business appointees, they are probably looking forward to the great possibilty it will be forgotten for good.

There's some criminals for you. The kind our forefathers would have probably enjoyed tar and feathering and running out on a rail. Including Bush himself.

[TXfemmom]

Mismanagement of the economy plays a large part in it, but most of it is greed, being driven by the oil companies and the speculators.

We spend almost $100 million dollars a day protecting the Strait of Hormuz, so the Kuwaitis, and Saudis, and even Iran can get their oil out of there. If Saudi Arabia wants to get their oil out, tell them they have to pay us that, plus an additional $100 million dollars a day, and guarantee a certain percentage of their oil at $90 a day, or we pull out and let them try to keep Iran out.

The other alternative is to keep our corn, wheat, and other foodstuffs in adequate amounts here in the U. S. at prices which will not put us into recession, as the government has given tremendous subsidies of all sorts, and continues to do so, with the farming industry. The rest, which would be considerable, may be sold to the outside, and Saudi Arabia and Iran, who both import an overwhelming percentage of their foodstuffs, as does Venezuela, at say, $100 a bushel.

Then, we should do everything in our power to cut our usage of petrol, and there are thousands of ways to do just that, such as rationing, as it worked in WWII and we are at war, and through encouraging use of public transit, demanding that the railroads increase and utilize their lines to move as much by rail as possible, making plastic bags for shopping illegal, and the use of oil in products which are not absolutely vital.

[swift goat pet for truth]

Somehow no one mention the fact that the US taxpayer is paying for a lot of the security in the region. What is Saudi Arabia's contribution to the quelling of Al Qaeda?

Oh, yeah, making sure the price of oil rises.

Or that when the US suggest to Iraq that they help out on the production and price of oil. they say, "Naw, we'll just follow OPEC 's suggestions. "


Thans, Neocons!

[PacificGatePost]

The Administration could have extracted a quid pro quo from Kuwait, Saudi Arabia & UAE before going into Iraq the first time. Long term and firm deals should have been struck.

Unfortunately when they and their companies are personally getting paid by those countries, it's hard to extract anything.

Fixing current economic problems will start on the ground floor.http://pacificgatepost.blogspot.com/2008/02/rebounding-us-economy.html

First get out of Iraq.

[hmmmmmer]

It is way past time for us to be delving into alternative energy resources and telling OPEC to F off. How can that happen though when the people running our government are so invested in the oil market. The rich just keep getting richer, the poor, poorer and this administration along with the Republicans are at fault. We need an initiative, just like going to the moon,, to put the country to work making oil dependency a thing of the past. With the oil companies spending so much to buy our senators and representatives without any impunity it is going to be hard, we need someone that will come up with a 10 year plan to stop buying oil and start working on something that will help us move into the future, there is no future for oil.

[blahber]

what mess? high prices? you're kidding right ...

[retarius]

There is an implied and offensive sense of entitlement underpinning America's relationship with OPEC and oil producers....it is that there should be some sort of moral imperative for OPEC to continue to supply an extraordinarily wasteful US with oil at cheap prices....will someone tell me why on earth should OPEC charge less than the market will bear for their oil so that Americans can drive to the mall in Hummers? Drive smaller cars, live closer to work, invest in public transport, switch off the lights, turn down the AC etc etc
Look back a few years when oil was $10 a barrel (mid 90's), were Americans saying 'let's pay more for oil so that these OPEC countries can keep their economies humming?"....the answer is no, of course not....Americans said "fuck 'em let me buy another V12, 5 mile a gallon monster, so that I can look like a total douche when I drive the kids to school".
The hypocrisy is this: the faux-market ideology is great when America is selling software and movies to OPEC at prices the market will bear...but if someone else takes advantage of market conditions to win, suddenly there is a problem...
Shut up and stop bitching!
The basic problem is that America wastes vast quantities of energy, now that corporate America has shipped all of the manufacturing jobs to China, India etc then other countries need energy as well...ergo the price goes up.

[January]

Spot on. There are more than the usual suspects here. Beating on Bush, since we all know that he is getting as rich as a desert prince (along with his sidekick Rasputin Dick) is spitting into the wind. Blaming OPEC for selling their limited resource for as much as they can squeeze out of us is spitting into a tornado. When you've met one oil baron, you've met them all.

Bush did his best. He invaded an oil rich country so that Americans could have influence, if not control, over what happens to oil in the immediate future. I never expected to see gunboat diplomacy in my lifetime, what with thermo-nuclear missiles and all. But when you can cancel international treaties at whim, we quickly resort to international bullies.

And Americans love it. The question is for how much longer will we lie to ourselves that we are a peace-loving people. How much longer will we deny the ravaging of our society by cut-throat piracy in our name? No wonder Hagee can command ecstatic enthusiasm from his followers by preaching the end of time. The future belongs to those who want Collapse. Like greed, collapse is good.

No wonder "green-talk" sounds like putting cut flowers in the barrels of the military. Business as usual is what the American people want, even if it means massive suffering both around the world and here at home. Oh, sure, we like hearing about change. So long as we don't have to do something to change. Ours is a generation of vipers. Our descendants will curse our name.