The Why of Chokingly High Oil Prices: Bush Together with Saudi Arabia Spells Disaster for America
How quaint such reasoning seems today with Ali-al Naimi running the Saudi oil ministry. The U.S. economy is tanking (literally) with oil prices having hit an unthinkable new high of $126 a barrel all the while with OPEC thumbing its nose at George W. Bush's lame plea to his very dear friend, Saudi King Abdullah to pump more oil. This in spite of being the recipient of the showy piece of neckwear that comes with the King Abdul Azziz Order of Merit and all the kissing and hand holding and weapons package procuring during his last swing through the Middle East.
The Saudis account for about a third of the cartel's overall production and are considered its defacto leader. Furthermore based on updated information from those certainly in the know, namely senior Saudi Aramco officialdom, reserves may be as much as three to four times the generally recognized 260 billion barrels (please see "Oil Innovations Pump New Life Into Old Wells" NYTimes 03.05.07). Current Saudi pumping capacity is understood to be at least 11 million barrels, perhaps a great deal more depending on whom you ask, or achievable in relatively short order were there a willingness to do so. Yet no help has been forthcoming from our dear old friends. Actually the market is being supplied with some 200,000 barrels less a day than was pumped and shipped in January.
We have all been endlessly informed by the oil producers and their allies why prices are where they are. The dollar, peak oil, geopolitical tensions, booming world demand, difficulty in accessing oil, refinery capacity. The litany has become familiar. We hear less about a teetering American economy, slowdowns in other industrialized countries weighing on oil consumption, the potential impact of new discoveries such as those in Brazil, warmer winter weather and on. The background music on both sides of the issue continues unabated.
The truth is much simpler. OPEC is manipulating the global oil supply just to keep prices high. It does it by taking oil off the market. Whether it is also actively impacting the price of oil by manipulating trading in oil futures either directly, or by individual members, or through surrogates and/or straw men on otherwise opaque commodity markets is an open question. What is known is that the cartel pulled back 1.7 million barrels a day of supply early last year after the Bush administration, in effect, gave producers its implicit blessing to push prices up from their then languishing $49.90 a barrel. The high sign came in our oilman president's 2007 State of the Union address when he announced his plans to double the size of the Strategic Petroleum Reserve to 1.45 billion barrels thereby signaling that the administration would do nothing of meaningful consequence to counter OPEC's tactics. In terms of restraining the price of oil, in terms of the well being of our economy, this policy shift has been an unmitigated disaster. All was further exacerbated by President Bush's stated opposition to the NOPEC legislation, Congress' attempt to remove the sovereign immunity exemption which placed OPEC's collusionary tactics outside the reach of American law, the Justice Department and the Federal Trade Commision. He made it clear to one and all that he would veto he such legislation if came to his desk. Reasons? You would probably have to go to a pretzel maker to untangle the twists and turns sorting out the reasons why. Perhaps it has much to do with a predilection to being helpful to his oil patch comrades in arms.
As the price of oil shot up subsequent to the Bush announcement, OPEC, perhaps more as gesture, "reinstated" 500,000 barrels a day effective eleven months later during November of last year (though 200,000 of this quantity mysteriously disappeared after January), not nearly enough in quantity nor early enough in time to bring prices down, witness the continued and steepening upward spiral of oil prices. Now the talk has been of further cuts or at best the status quo by OPEC. Why? Because a U.S. recession and a world economic slowdown would lessen demand, and prices might actually retreat, cutting into the producer's enormous profits. This past weekend the Financial Times quoted Abdalla El- Badri mouthing OPEC's now oft repeated mantra that the market was well supplied, "There is clearly no shortage of oil" he said, perpetuating a smokescreen of obfuscation behind which OPEC has chosen to hide and a rationalization for doing nothing.
To add insult to injury the administration's resident "Heckuvajob Brownie!" Energy Secretary Sam Bodman stated unequivocally only a few days ago that he would continue to fill the Strategic Petroleum Reserve (STP). Then with further studied insight advised us after heart to heart discussions with that other dysfunctional government agency, the Commodity Futures Trading Commission (CFTC), that he was convinced there was no reason to suspect manipulation was the cause in whole or in part in determining the price of oil and its derivatives as traded on the commodity futures exchanges.
Meanwhile, the United States continues to pick up the $100 million plus-a-day tab to protect Gulf oil shipments and Saudi Arabia. Just days ago Defense Secretary Gates pride fully announced sending our second and newest aircraft carrier through the Straits of Hormuz as a "reminder" to Iran. Reminding Shia Iran of what exactly? Certainly not least to think twice about aggressing against Sunni Saudi Arabia. This, all the while we are continuing negotiations with the Kingdom to permit us to arm Saudi Arabia with our latest and most effective weaponry.
George Bush may still be enamored with Saudi Arabia and its royal family. But, as our so-called friends immutably watch our economy sink into recession with its growing and punishing impact on households across the nation, and untold hardships being visited on developing economies around the globe, it's clear that the price of Mr. Bush's friendship has become frighteningly expensive to us and the rest of the world.
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Face it - the United States was challenged re oil back in 1974 and has LEARNED NOTHING. We are still wasting precious resources on inefficient engines in factories, homes, and vehicles and we have done little to develop urban environments that are equipped with mass transportation. The American conservation model is Houston...one man in one huge SUV, sitting in slow traffic on the freeway. Geez. Our friends, the Saudis, have brought us to our knees. Let us pray...
BIG NEWS, A GUY LOCAL TO ME HAS SOLVED OUR OIL PROBLEM. HE HAS IMPROVED HIS GAS MILEAGE BY 275% WITH AN INVENTION THAT TURNS WATER INTO HYDROGEN RIGHT AT THE CARS INTAKE MANIFOLD. SPREAD THIS AROUND BEFORE MSM AND BIG OIL SQUASH IT.
THIS IS FOR REAL. NOT A SALES PITCH.
'Gas prices push retiree into action
HARTSELLE -- If you are tired of paying $3.50 to $4 per gallon for gasoline, Larry Thrasher wants you to visit him.
He won't be able to lower the cost of gas. But, he said, his generated hydrogen system will increase your miles per gallon and decrease the number of trips you make to the gas station.
After more than a year of research and testing, Thrasher said he has perfected a system that will allow your vehicle to run on hydrogen and gasoline.
Long range, his plan is to run a vehicle on hydrogen only.
Because of the number of electronics in vehicles, he said, his hydrogen system still depends on some gasoline.
Since installing the hydrogen fuel system on his eight-cylinder Cadillac, Thrasher said his fuel efficiency has increased from 19 miles per gallon to 53. His wife's 1996 Toyota gets about 71 miles per gallon.
A former teacher at several technical schools with more than 30 years of automotive experience, Thrasher started researching his system about 16 months ago.
-FOR REST OF ARTICLE
http://www.montgomeryadvertiser.com/apps/pbcs.dll/article?AID=/20080513/BUSINESS/805130339&referrer=FRONTPAGECAROUSEL
How old is this scam? 30 years? Or older? Does anybody know when and where it originated?
20% fuel economy gain, by slowing from 65 miles per hour, to 55.
http://www.atimes.com/atimes/Global_Economy/JE10Dj05.html
Amazing that we talk about conservation and not the major problem that helps to lead to all resourse problems.
There is one animal on this planet whose population is out of control... human. Does little good to drive less if the next week you have more people driving.
Biofuels are part of the solution... buit it should not be ethanol from CORN and that is where almost all of our bio subsidies are flowing to!
Regards
Wrong, Corn is fine, the problem is the liars talking about Ethanol. The cheapest feed for cattle feedlots is next to an ethanol plant.
There are a lot of reasons food prices are going up, and ethanol doesn't even hit the radar screen compared to the others.
Nice to see someone mention over-population and population growth. Even on the boards where people are discussing the coming decline in oil production and desperately trying to come up with solutions, very few bring up population growth. Somehow they can see the benefit of driving cars that get better gas mileage, but don't think for a second that maybe the amount of people driving could be limited as well. Population growth via births greater than 2 per mother and via immigration is just so sacred to Americans that it clouds peoples thoughts. The Sierra Club can somehow consider it an environmental group and takes no position on immigration into the US (legal immigration is now over a million a year).
I think the best hope is wind and solar and maybe wave energy combined with some as yet undeveloped way to store the electricty.
But as far as what is driving the price up - it's supply and demand. Raymond Learsay and his ilk are going to be blaming OPEC and speculators and whatever for a long long time because oil prices will only go up from here on out as supply begins to decline and demand from China and India and any other country where we have exported massive amounts of jobs, ramps up their oil usage.
I love talk about Oill being free market. What crap. You dont have free markets when you have cartels and 90 percent of the oil reserves are state owwned. Repugs dont even know what a free market is.
We have the same problem with drugs, where drugs prices around the world are set by governments such that we pay 5 times more for the same drug and thus subsidize their healthcare system at our expense.
Repugs need to get off their Idealog asses and realize that Communist China is not a free market anymore than Dubai where in both cases the governement gets a 50% interest in any business.
Or that energy prices are subsidized in much of the world such that their gas prices are not going up to curve demand... which is a problem with thinking that our high prices here will help a lot.
Regards
The free market part is correct because it does not matter that you have a cartel controlling less than half of the production. What matters is that YOU are FREE NOT TO BUY any oil based products like gasoline. OPEC can't make you buy, neither can your own government. Of course, YOU CHOSE to buy the stuff AT ANY price. So why are you complaining? And why do you expect the markets to lower prices when you don't mind paying more?
In most parts of the world energy is highly taxed. The one exemption is the US which uses 25% of the world's energy. See the correlation? Europeans and Japanese are taxed and use half as much as us per capita.
Reality is a hard thing to wrap ones mind around. It is so counterintuitive.
So get real. What are we to make your plastics from? The body of your car from? What are we to do about fertilizer? Everything you do has oil in it, not just cars. Oil, Mr. Kill. is in everything. It is not a resource that can be safely left to markets, this is absolutely clear and we have Bush to thank for this. He learned from the master. Markets are a economist joke from the 1900's Eco 101 college book. No longer relevant. Today we have a new reality.
We invaded the wrong country.
We invaded. Period.
We need to stop invading countries for their natural resources, and develop other forms of energy. OPEC is comprised of mostly Arab nations all bound together by their religion and race. This squeeze by our so called friends in Saudi Arabia proves that blood in thicker than oil in this case.
OPEC is by no means composed of people of the same ethnicity and religion. It is this kind of ignorance of facts that got us into this mess. OPEC also does not squeeze the world at this point. They are pumping as fast as they possibly can. It just happens that the world can not pump much faster.
As far as price is concerned: price is set by the buyer. YOU agree to pay $4/gallon at the pump (or $8/gallon when you are a European) whenever you lift the lever. OPEC can not make you pay that much. Once YOU decide that YOU won't buy any gas at more than $2/gallon, oil prices will go down commensurately.
I know it does not feel that way because you think that you just have to use as much gas as you do. But that is an illusion. In Europe and Japan they use half as much and live. Quite well, actually. I use less than half as much (by driving a Prius and commuting on the bus and train) than the average American and I don't feel squeezed. If you do, you might have to change your habits. There will never be much more oil available in the market than there is now and soon there will be a lot less.
You are wrong about price in so many ways
Kill... btw I agree with you probably more than I agree with anyone on this board.. Tax the hell out of it and use less. I laughed at the idiots years ago pulling up in their Suburbans at $1 a gallon.. We are getting what we deserve.
GOOD GRIEF..so,we're supposed to lower the price of oil...SO ALTERNATIVE ENERGY AGAIN BECOMES TOO EXPENSIVE??? SUCK IT UP AMERICA...$5 A GAL GAS..will bring a technological revolution....SOLAR, WIND, HYDROGEN, and no telling what else...are coming into their own...
and Dont believe Cheney..HYDROGEN IS HERE....and can be produced by SOLAR ENERGY..GET IT??
THE LAST thing I want...is for the price of oil to fall...Alternative Energy will bring MILLIONS of JOBS to the US....WE ARE AT THE BRINK of something wonderful....as soon as we get the REPUBLICAN BASTARDS OUT OF OFFICE.
While I understand you want high energy prices so it forces a change... that change is not happening. That change became economical at 60 bucks a barrel which is what the price was a year ago, At these prices, people will be starvng in the summer and freezing in the winter.
McCain after the last 8 years of Bush who he supported is some how a viable canidate who may even win!
I haven't heard one Candidate talk about an Appollo or Manhatten style project where in the American dessert we begin to immediatley build huge wind and solar energy warms that within 10 years would be producing half of our energy. And setting up engery farm areas within our City borders and feeding that energy into the local grid reducing locals energy bills.
In our goal to go to the moon in ten years , the technology didnt exist, this technology does and it has immediate payback within weeks of starting, which going to the moon did not or we would still be there.
In your approach, we backrupt the country, further increase our trade deficits and hurt the poor and our country. We wipe out several industries. As I said there is no one doing what is needed and all we are getting is high prices and Petro goes into plastics, insulation, carpet and every food item.
This s/b sold as Security Project. Now back to the important stuff like what is Reverend Wright doing today.
Regards
Golly gosh, a lot of rhetoric here, and Very Few Facts.
Hate to lay the truth on ya, but (a) OPEC was the brainchild of a Venezuelan, probably before you were born ...
As for dem narsty speculators ... (b) maybe you missed the groupie message that China was and has been advancing at 10% per annum. That is, 'a year', for the NCLB crowd. Eh? The old 'supply and demand' equation, no pixie dust, see?
And those windfall profits? Average oil company returns on investment are way up to 8.7 % -- not that I'm a devil's advocate for Exxon or the rest. I just like to occasionally see Reality seep into these fascinating discussions.
Talk about rhetoric vs reality: returns on investment in the oil industry are over 25%--you have been reading too much oil industry rhetoric.
Even a 25% return would make it a mediocre investment after a decade of close to zero return. Do a net present value and never let the facts get in the way of your prejudice.
In any case, you don't have to buy this stuff. Most people here act like addicts who blame the drug dealer that the drug is too expensive. Please, please, think a little bit about how ridiculous you all sound. It is getting annoying.
First, demand world wide actually dropped.
Secondly, lets not hear its because we have not let a new refinery be built for 30 years because of environmentalist. One new plant is now operating. Secondly at recent congressional hearings, each top oil exec was asked if they want to build iany new refineries in the U.S. and they all said NO.
Thirdly none other than Boone Picket has said that 35 to 40 bucks per barrel is specultaion.
Fourthly as the Irainian oil ministry has said its not that oil is so much more expenses its that the dollars is worth so much less.. 60% less in just 4 years due top BUSH's massive budget and trade deficits and tax cust and wars financed by borrowing from the Communist Chineses.
Regards
Name the source for your contention that return on investments is 8.7%. Probably oil companies or people they pay to say such things. One of the CEOs was paid $400million recently for his yearly compensation. Multiply that a few times down the corporate ladder and wonder what their real return was. With the staggering quarterly profits announced, why do they still need taxpayer subsidies and pay no income tax? There are so many ways to hide real return that none of them are believable.
Bush is a serious problem. War and tax cuts equal big time ongoing debt. But it ain't Saudi Arabia, cause there is enough oil to drowned the damn world. We wil choke on the air first. Notice anybody waiting for gas. See any shortage anywhere except in countries like Nigeria that have oil in the first damn place.
2 to 3 Trillion barrels of oil sand in Alberta, Canada. 3 Trillion barrels of heavy oil in Venezuela. Yes, Trillions.
Do you really believe in supply and demand. Where are the shortages? Hell, we've tolerated starvation everywhere, but don't tell me I have to look around for a loaf of bread. Don't tell me I won't find plenty of sweet corn this summer. God, when are you going to write, or maybe you have, about all that ethanol making tortillas expensive?
We're getting screwed and the ignorance you spread helps make it possible. You should be working on our Mexico/U.S. fence. National Security and all.
Here is my suggestion to everyone who thinks there are trillions of barrels of oil in sands and shales out there for the taking: go and get yourself some financing, secure mining rights and then go for it. Become rich. Be a billionaire. If you think you know geology and how to make a killing, just do it. Don't mouth off on the web where talk is cheap. Go and dig, drill, shovel, melt your way through the layers of rock with the real stuff.
What exactly is the problem with increasing oil prices?
The Middle East has oil - everyone wants oil - there is nothing wrong with them limiting supply to maintain a higher price.
If we and everyone is willing to pay it - well - we have dug our own money pit with our reliance on oil from a known unstabileunfriendly source - and we continue to dig the hole we are already in.
But what is really driving up prices are pretty simple:
1) Traders that speculate on the future are driving up the price of oil.
2) Middle East instability - we ain't helping waging a civil war in the middle of the Middle East.
3) Countries such as China and India are using more and more oil and their increased in consumption is only going to go up - which will raise the price of oil.
4) This country voted for politicians in many cases who did not believe that oil was going to be anything to worry about and enacted no policies to get us off oil.
We KNEW this was a problem 30+ years ago - and we did nothing - well know the problem is now a cold slap or reality.
Jimmy Carter started us on the road away from dependence on foreign oil. If we had listened to him, we would be weaned by now.
Why is it that no one speaks of Alaska and its vast oil fields which could supply all of the US for the next 200 years. Why is it the oil wells in Texas and Oklahoma cannot pump more than 500 gal
per month and they get paid for NOT PUMPING much like the farmers get paid for not planting.
Please supply the facts to back up this hogwash.
200 years? Are you referring to ANWAR? Try again, ANWAR could supply ALL of the US consumption on a time scale of months. As has been mentioned elsewhere, it will be a blip in the US supply side equation, on the order of 4-5%.
Texas WAS great, nice easily extractable high quality crude. News flash, its long since peaked..."long since" as in bell-bottoms and disco.
Move along, nothing to see here.
Actually we did start to do something about it under carter. Wind and solar tax credist. He even put solar cells on the White House roof... Reagan took them down...
Dont you just love Repugs... they want to run the world by looking through their rear view mirror.
Regards
America should have invaded Venezuela instead of Iraq....plenty of oil and unlike the Iraqis Venezuelans love baseball.
No wonder they call Bush an idiot.
Wait, I've got it! What if we didn't invade anyone? Oil prices and the falling dollar would be much less of a problem.....
And like Iraq it has on the order of 80 billion barrels of "proven reserves". Which in the real world means it can probably extract 40 billion barrels of oil. Which, at the current production rate of over 80 million barrels of oil a day means that they could supply the world for 500 days. In other words... all by themselves they can supply a few percent for a few decades to come. Everything is relative and once you look at the numbers it's all pretty measly.
Wow! There are some bigtime trolls on this topic.
Heed Mr. Learsy, his points are based on fact not Right-wing whacko radio shrill babbleheads.
Be careful whose opinion you adopt unchecked. That's all I can say.
Mr. Learsy is correct, I have checked. I know you may think the dollar or commodities exchanges run up, or a host of other Buggey boos, and yes they contribute, but they are not the reason, their riding on the wind here--though the right wing media wants us to think some grand thing, it is all the oil-- this is the plain and simple of it!
Ever since the Huffpo let back in comments from anybody to counter the problem of people not being heard, the "conservative" folk have come back with them and the numbers of comments have soared. Hard to get heard anymore with all the racket.
OK let's invade Saudi Arabia! I had enough. All jokes aside--cause we are probably gonna go into Iran, Why? I don't know, but we are!
But oil is going to hit $200.00 a barrel, this I know for sure. They warned us about $100.00 and did it, if they are warning it, you can bet it is going to be. A world conference must be called to end the Oil Companies, OPEC, the Banks, and commodities exchanges from sliding the world into WWIII.
And Bush should be impeached and forced to face the crimes he has commited against the American people.
Calm down. Oil is going to hit $200/barrel anyway. Why? Because they are paying $8-10/gallon in Europe already and they are still driving. What makes anyone believe that unlike Europe the US will stop driving at $8/gallon? Any indicators? I don't see any. But $8/gallon is approximately what you can expect from $200/barrel oil. It's a done deal. Invading Iran or any other country is completely unnecessary.
Americans are cutting back on consumption of oil. http://www.oilvoice.com/n/US_Oil_Consumption_Declines/ff895835.aspx From the article: "...dropped by 2.2 percent, meaning a decrease of 45,000 barrels a day leading to 20.114 million barrels a day when compared to the previous year.
This has been the lowest demand in any month, since April 2005. "
Sorry to cloud your clear thinking with facts.
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