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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Before anyone cries "conspiracy theories" lets recall what happened within weeks of Bush getting into office in 2000. Cheney had a super-secret behind-closed-doors meeting with his energy buddies. Immediately afterwards big Texas energy brokers began manipulating the power grid to drive California energy prices through the roof. Remember that? A wholly manufactured 'power shortage' that meant a windfall for Bush's Texas energy buddies while the rest of us suffered. Bush stalled and obfuscated on finding a solution. Drove the previously healthy economy into a recession, if you remember. Does any of this sound familiar, like what's happening TODAY?
Hey man, you can't possibly be suggesting they planned all this?
Heh.
Hello! are you out there? exactly what Recession are you talking about?
throw the words around, figure out what they mean. As they say "Words mean Things"! Duh!
Odds are you just aren't feeling it, yet. You will! Duh!
NYT posted a list of 12 multimillion dollar houses facing forclosure in the Hamptons. Guess the Chinese and Russians don't want to live there.
Recession, No there is no recession as long as you peg inflation at under 3 percent and don't include food and energy in the equation. Is this Voodoo economics? Even with the fake numbers the economy is going down.
Just remember when the revolution comes those that have money will need to avoid the mobs.
Have a good day.
Has anybody considered the fact that the reason the current administration supports (or condones) high gas prices is because it is another form of taxation? Think about it, with higher gas prices comes higher profits, and with higher profits comes higher corporate taxes. Bush slashes tax at the income tax level only to make up for it through taxes on oil profits. It's all a shell game, folks.
Too bad those GOP supporters can't add two plus two -- they think their taxes are being cut, when in actuality the administration is making up for it at the pump.
We're being punished for having the clown prince chimp we elected in office . Chavez is a member of Opec and this reeks of action on his part.
Sounds silly, but it's true, because obviously they know that they will get a hell of a great ride from this while Bush's oil buddies are making it hand over fist. He's not about to stop their climp to their incredible financial heights. To hell with average Americans, let's get it while we can, right George?
It's the while they can part t that will make this interesting.
There are articles appearing in New England newspapers about mid-income families being wiped out heating-oil payment wise from last winter and about to have their utilities shut off by the hundreds, if not thousands.
And yet next winter the cold will come agian. And who will pay and where is is this money going to come from since a great many people are being laid off and a great many more are being stretched to their limits by increased prices.
And a new president will take helm in what is historically one of the coldest weeks in the year.
Then what?
Will oil profiteers suddenly en masse find the need to become country squires and spend more time with their families? O r do they get to feel some of the pain they've caused while sitting in a jail cell?
Of course, there is that other question.
Why is an economy that can come up with nano-chips and stroll on the moon still tied to a millstone of pretty much the same internal combustion engine in use with the Model T?
Isn't it inevitable that we need to find not just an alternate fuel, but an alternate engine?
gala1
Maybe the northerners who can't afford the oil will move south and vote the republiscum and their demoenablers out of office.
And yes, we need a new engine. There's one waiting. http://en.
I am surprised you are still hitting the OPEC as manipulator theme. Everybody else seems to realize that it is the speculators that have driven oil up and you seem to be the only one still blaming this on OPEC. The speculators which everyone agrees is driving prices up (except you of course) are your next door neighbors right here in the good old US of A . They are not the boogyman in Saudi Arabia or other dark corners of the earth. Yeah shock upon shock for you eh! How can you in all honesty think that the people who read this blog are so damn stupid.
Why not? Paul Krugman believes it wasn't speculators. I wouldn't blame it only on OPEC however. http://www
The manipulators are in the White House, or that other supposedly non-executive branch of this government, not on the trading floors. Saudi Arabia is NOT dark. Neither is Venezuela nor Texas. Maybe you should go see.
HaHa! Anybody who believes Learsey deserves the results that his type of simple minded analysis gives. Funny I don't see a lot of people lining up to pay Learsey for his pearls of wisdom. I think he fits in well with the UFO crowd however. He might as well be dictating this nonsense from Roswell.
Never fear! By September, oil prices will be in steep decline. American consumers will breath a great sigh of relief, as oil falls to a BARGAIN price -- $90/barrel! To celebrate, Joe Sixpack will take his SUV out for a two-month cruise, ending with an Election Day tailgate party, just after voting proudly for John McCain.
Prices are going up now SO THAT they can be dropped again at a politicall
Sad, but true. I do think that they will lower it below $90 because they will make it all back up when McCain gets elected. A stunt like this will put McCain over the top...
OPEC may do it themselves if they can afford it. If they keep the price too high, people find alternatives. Junkies can't be trusted by their dealers if they don't need a fix.
The monopolistic oil companies are the real problem, together with the catastropic devaluation of the US dollar in progress. Not to say the producers don't have a role, but OPEC is by far less than half of the problem.
You are correct sir, in case any people are still out their thinking the only problem is the evil oil companies . . .
Oil up 100% over the past 4 years compared to the Euro
Oil up 300+% over the past 4 years compared to the Dollar
Democrats control Congress now for 18 months and they have done nothing...
What's that got to do with peak oil?
I believe he may be refering to Nancy Pelosi 2006 saying elect Dems because we have a secret plan to lower gas prices.
Red Rover, Red Rover, let Tator-tot come over....
Learsy, the more you spout off your nonsense, the more people will be able to see through it, and you. For the awake and aware, this is a trivial matter.
Two words, Learsy. Repeat them after me now:
Peak Oil.
Wake up, dude. Christ.
That's Cheney-speak, verbatim.
Any one with brains will see that this way of thinking is going nowhere after watching Cheney's idea of manipulating dominance in the world has blown up in his face.... No, wait- that's right, this is exactly the way Cheney wanted all this to go down. Just because he wouldn't give us any indication whatsoever what went on in his energy summit at the beginning of his 1st term doesn't mean we should have a clue what this sorry corrupt criminal intends to do beside send the country to hell while his company scores big.
And you're supporting this goon. Shame on you.
Where are the lines at the gas station, if we're suffering oil shortages? Who is going without?
The supply is clearly adequate to meet all of our needs.
The price of oil is dictating the price of gasoline, not the other way around. If this were truly a supply/demand phenomenon, it would be the price of gasoline dictating the price of oil.
Drivers aren't driving the prices. Gas stations aren't driving the prices. Investors are. Speculators. People buying futures contracts for oil that hasn't been pumped and won't arrive until several months or several years in the future. It's an oil bubble. And now it's still inflating, and people have made and are making gobs of cash based on that price inflation. If and when it pops, the price of oil will plummet. No, it won't go to $10 per barrel, but $60-$70 would be easily achievable.
And we as a country should be rattling our oil fields to spook these investors. Dems should put ANWR on the table, yesterday. Even if we never pass the bill, or actually drill in ANWR, or even if we wait 15 years before doing so, it would be a psychological blow to the speculators. We should stop filling the strategic petroleum reserve, and perhaps even talk about releasing some of that oil, even if we never do it. We should be talking about lowering freeway speed limits to 55 for passenger vehicles and 50 for semi-trucks.
Who is going without? If you bother to follow world news youll read stuff like farmers switching from tractors back to ox drawn plows for example. Poor countries have periodic shortages of vehicle fuel. Even riots.
And gasoline isnt the only use of oil. If speculators ARE driving the oilprice spike, they are just an aspect of the Peak OIl. Personally I think the rising oilprice is because insiders can read the writing on the wall. Peak Oil is starting to make an impact.
There is a Gold Lining in higher Oil prices and personally I hope they go up a lot more. Why? That is the only language Americans understand in order to really concentrate on alternative fuels BIG TIME. So ultimately the Saudi's and their Cohorts are digging their own grave. The U.S. is already ramping up in terms of electric, fuel cell and hydrogen power and of course smaller cars. The day will come when we will not need much oil anymore. Meanwhile we need to be careful though not to let the Saudis buy up the country with our own money. So lets haver 8.00 a gallon prices that should do the trick.
There is no practically feasible way for this country to replace all oil imports with alternative fuels. At least not until Congress suspends the laws of nature.
I still see many frustrated drivers on the highway, driving alone in large vehicles that get less than 10 mpg. The truth is we need to change our society to adapt to a world with high energy cost. We design our communities to require automobile use for just about everything. We decentralize retail centers (Malls). We live in bedroom communities and commute to work. We choose vehicles based on the personality we wish to project rather than practicality. Our homes are larger than they need to be.
We are obviously stuck in the era of cheap energy which has now passed. Alternative energy will not be cheap energy. So we won't be returning to the good old days when fuel cost was not an issue. Rather, we need to begin to think about very fundamental choices we all make and seriously consider energy cost. Eventually it will be forced on us all. The astute among us have already begun to adapt.
Yes but we can stop using oil in such quantities. Drive far less. Reduce demand.
I agree there is not enough alternative fuels....b
Since there is no alternative to oil, and oil is bad.....we must stop using it and replacements for it.
Is your idea, KillTheMessenger, to use whatever fuels we have until the sky goes dark?
Then what are we going to do when it actually runs out you moron?
You do know that the price of everything would skyrocket right? If you want 8.00 gas I don't want to hear any bitching about poor people because there are going to be a ton of them that can't work or eat.
Maybe employers will allow more working from home?
Impeach Bush now !
The circumstances of higher oil prices evolved long before President Bush arrived on the scene and have now culminated in the tank we're in. The USA cannot drill new fields, construct new refineries, expand nuclear facilities, for wierdo environmental - "ism." Gettin' the wierdos to somehow cooperate in a sane approach to supplying this country's oil needs and high standard of living is out of reach as they are more interested in failure than success of Americans. Then we have the effete at-large Demorats wailing about how prosperity is bad, of course. So Saudi Arabia looks at our country and dismisses our problems as self caused, understandably, and refuses to act. Anyway, their coffers are bursting under the weight of dollars and it benefits them more to cooperate with lesser OPEC members to enrich their coffers, too.
Conserve? Sure. But it takes leadership from Congress and it ain't gonna do nuthin'. The Prez has tried, yet just like Social Security the effete dems have sabotaged any efforts to provide a way out of this country's problems. Reelection is more important to yellow-belley Republicans than the USA's correction of woes, and now fate has served up a naive (calling for a "civil" debate) Republican candidate for President who will be shredded by the Democrat candidate. Ya think things are bad now? Wait on it -- here comes Carter II in Marxist terms.
If you are a troll, you are pretty good at it... if you really believe any of this... I wouldn't want to be you for a second.
....second that.
We cant really be surprised by posts like caseybabes. Debating with ignorance of this calibre is futile. Proving them wrong beyond any reasonable doubt will fall on deft ears. It is an affliction and it affects more people than any of us would care to imagine. So, when faced with "logic" like the post above there is only one response..
The Prez' tried to promote conservation? Hehehehe, that was a good one, hahaha, oh man. What is an at-large democrat?
Sorry Caseybabbles, no "Liberal Boogieman" for you and the other effete at-large RepubliCONS to run screaming from, like the pussies you all are.
As the oil companies have consolidated they have closed refineries, a very easy way to control supply.
And with a RepubliCON president for the last 7 years and a RepubliCON controlled congress for 12 years, surely the environmental laws could have been changed, if they really wanted to change them.
So cry Liiiiiberals are gonna get me and run and hide like a good CON!
Typical from Casey. Insult people who care about the earth or are trying to orient our thinking toward a sustainable future for our grandkids and then parrot what the right wing radio instructors, the pResident and Rove are telling him/her to say. Then when no one takes the bait, call us losers and move on.
Elite is not an acceptable neocon insult anymore so s/he'll call them effete and wierdo. Talking points: blame Congress even though it was the White House and their loyal R's who blocked all the tax incentives for alternative and sustainable energy this year. Call the disloyal R's yellow. Tell us how D's complain about prosperity.
Talk about toxic trash. . .
The OPEC are enjoying their profits by price-gouging oil at any cost. I will say that they all are driving Mercedes Benzs now, but I predict that their children will soon be riding "camels" again. All good things eventually come to an end......i
"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."
More conspiracy rantings.
Saudi Arabia has vastly overestimated their reserves. Why? To try to maintain their role as the dominant producer and price setter. The facts are that they are at full capacity now. Their fields are in decline. They just don't want anyone else to know it.
Learsy accepts the Saudi claims of increased reserves as gospel, at the same time claiming all their other actions are lies and deceit. You can't have it both ways.
The mathematics which accurately model current production, and which accurately predicted peak production in the US lower 48 are available at several good web sites and texts. The scientists, geologists, and other academics putting forth this modelling have no connection to Learsy's "Big oil" conspiracy. If anything, their interests run counter to that of oil companies.
Peak oil is essentially here now. Learsy is like some kind of a conspiracy buff with these incessant posts. Why is Huffington Post enabling this?
The war profiteering by contractors, monopoly oil, refining, pharmaceutical and hmo profits, should be mitigated. Default further payment. Suspend subsidies. Indict the Administration. Exact penalties for market manipulation ala Enron. Exact royalties on pharmaceuticals developed under any form of subsidy/gr
Hundreds of billions could then be allocated to green tech, schools, medical coverage, innovation, infrastructure and prosperity in the US and America.
And none of this would move oil prices one cent. You would still drive to the gas station and fill'er up for $4/gallon.
May I call you "Cassandra"? You are spot on, but nobody is listening. But you and me and everyone else with an education and critical analysis skills will get our "I told you so" moment. It's just not as much fun as actually solving a tractable problem before it becomes a hell of a mess.
I think there is something to Peak Oil. However, even if we don't believe the Saudi claims on their reserves, what is there to make you believe they are NOT manipulating the price?
You said:
"Learsy accepts the Saudi claims of increased reserves as gospel, at the same time claiming all their other actions are lies and deceit. You can't have it both ways."
Liars don't always lie, but in this case, perhaps they do. Why should we NOT believe the Saudi's together with their friends in the White House and their friends in the Oil Cos are manipulating the price of oil? Maybe it's their stellar record of honesty that has you convinced?
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