Late in December the subjects of King Abdullah's Saudi Arabia received what others, elsewhere might have termed happily as a Christmas present. The King decreed that a planned 25 percent increase in the price of regular gasoline be rescinded. Oil Minister Ali al-Naimi, whom we all know as having been in the vanguard recently to bring about the first OPEC production cuts in 2 ½ years in a collusive effort to support a world price of $60/barrel. Al-Naimi was able to take sufficient time off from his incessant chirping about "high inventory levels", his blatant cover to restrict production in an effort to drive prices higher, and to proclaim:
"This order is the latest of (King Abdullah's) initiatives which aim to contribute to the welfare of the Saudi people."
And the Saudi people are very fortunate indeed. Keeping the price at 0.60 riyal's per litre for 95 octane gasoline is the equivalent of 60.6 US cents per gallon, while 91 octane was priced at 0.45 riyals per litre or 46 US cents per gallon. A nice tank full, if you can get it.
As one can readily assume that crude oil constitutes some 60% of the price of gasoline, then on the basis 60 riyals per litre the crude oil cost basis is about $15.00 per barrel. This, an enormous difference to what world consumers are paying for the same commodity ranging this past year from $78/barrel to the current +- $55/barrel.
The difference is so great that the question needs be asked whether Saudi Arabia, as the current custodian of the greatest natural resource, the world's largest reservoir of crude oil, is fulfilling its responsibilities to the world at large. Our universe, its societies, politics and economies have become so interdependent that perhaps the time has come to demand Sovereign Responsibility concurrent to Sovereign Rights.
The oil under Saudi Arabia's suzerainty is being made available to the world at large virtually without consideration as to need nor equity. Not only that, but Saudi Arabia breached their fiduciary trust and has delivered this vast and important resource into the grip of the larcenous OPEC cartel in order to extort the maximum possible lucre irrespective of the enormous economic distortion it creates, wresting the means to build Palaces and Yachts from the backs of the miserably poor in the Asian subcontinent, Africa, and throughout the world. Riches attained by adding no real value other than the serendipity of finding themselves with 'Sovereign Rights' over one of the world's key economic engines.
Thus steeped in riches beyond the wildest dream of Croesus, not by dint of entrepreneurship nor inventiveness adding no significant economic benefit to global growth other than simply pumping the oil. An entire nation of otherwise highly competent people has found itself anesthetized by oil wealth and government boondoggles. And not to be overlooked, the sinister billions upon billions being funneled to teaching facilities and prayer halls throughout the world preaching or rationalizing irredentist extremism with its resulting social, political and economic disequilibrium.
In today's world Sovereign Rights can no longer go unchallenged if it does not entail Sovereign Responsibility (think Sudan) and Saudi Arabia has used its patrimony to simply enrich itself by being party not to free and open markets but to a willful distortion of price and supply, a total affront to the rules of the World Trade Organization that flatly bans conspiracies to rig markets prohibiting its members from setting quantitative restrictions on imports and exports.
Saudi Arabia's custodianship is further placed into question by her cavalier dismissal and irresponsible stonewalling of all calls to candidly share with the world, who are its customers no less, information on production and reserves enabling the world's economies to rationally plan their future energy determinants. Saudi Arabia is generally understood to have crude oil reserves of 264 billion barrels according to the U.S. Energy Information Administration. Yet, in an unguarded moment in December of 2004, Saudi Minister of Petroleum and Natural Resources, the same Ali al-Naimi, volunteered that this amount could readily be increased by another 200 billion barrels. There are others, especially proponents of Peak Oil theorizing, who question these figures and find them high.
That a nation at the fulcrum of the world's economic health could be so cavalier in its lack of candor, its lack of responsibility to its world wide markets, and given the critical importance of the resource to which they are custodians, it becomes an act so fundamentally self serving that it should not be tolerated.
In addition this Sovereign state is unable to adequately protect the treasure lode that has served it so well. An international task force of warships navigate in the Persian Gulf off the Saudi Coast (at a cost of over $100 million dollars a day paid for by the citizens of the coalition) riding gunshot for Saudi oil shipments and at the ready to fend off intrusion or attack. One begins to wonder, rather than being a short hop away at sea, whether the next step be taken, in the interests of the world's economic well being, to have the coalition go the extra mile securing not only the shipping lanes but to secure the oil fields themselves. These fields happen to be located in relatively sparsely populated portions of the country. That their administration, production and distribution be turned over to an international agency such as a newly reformed UN or better yet to the International Energy Agency. The agency's mandate would be to distribute this world treasure in keeping with the world's societal and economic needs and no longer by priorities delineated by OPEC and its coven.
Certainly Saudi Arabia's interests could readily be looked after as well, but not to the extortionist and self serving degree as at present. Sovereign Rights/Sovereign Responsibilities, where does one draw the line? Perhaps the time is past where Sovereign Rights are sacrosanct and that this issue be opened to scrutiny and public debate. We might all be the better for it, as would perhaps even the Saudis themselves.
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