Saudi snooker
UNITED NATIONS Ñ The current hysteria concerning climbing gasoline prices has created the usual myths, paranoia, and breathless concerns. But with oil prices at record highs at over $40 per barrel recently, the Saudis are naturally easiest to scapegoat as the Summer season approaches. Still the real issues are really as easy as ABCÑAmerica, Bush, and China.
First off America consumes huge amounts of energy. And for the longest time, our fuel prices were (and by European standards still are) pretty low. But a surge of cars and SUVÕs have created higher consumption. This is not an evil but a fact.
Based on the reality that the USA remains dependent of Òcheap foreign oilÓ the price at the pump was kept economically acceptable. Yet even with $2+ per gallon prices, thatÕs stillÑadjusted for inflationÑabout half the price of the 1970Õs crisis.
LetÕs not forget that during the 1990Õs the Clinton Administration actually increased our dependency on foreign sources of energy. Fine. Now letÕs talk about the political strings. Ever wonder why we are so interested in the Middle East?
America consumes 20 million barrels of oil a day. Mainland China uses just over 5.6 million and Canada 2 million. The U.S. imports about half its fuel, the rest comes from domestic production. The Saudis as the worldÕs largest petroleum producer pump just over 9 million barrels a daily; now the Kingdom is willing to palaver with the OPEC cartel and raise production quotas to cool prices.
According to the U.S. Energy Information Administration, oil prices could fall if Saudi Arabia delivers on its pledge to pump more crude.
Second, why are energy prices suddenly so high in the first place? Blame BushÑfor a better U.S. economy where we are consuming more fuel for commerce and pleasure. As the American economy expandsÑincreasing an impressive 4.4% GDP in the first quarter--so too the demand for oil grows. Our growth last year was more than double EuropeÕs.
One of the more idiotic myths is that George W Bush as a former Òoil manÓ somehow profits from all this. How? By deliberately alienating Americans consumers and voters in a Presidential election year? In other words, why would Bush believe he can win a tight electoral race by doing the one thing that will universally affect and alienate virtually every American consumer, voter, and driverÑhigher gas prices!
Third, China. Contrary to the Arab boycotts in 1973 and 1979, thereÕs a new mega-consumer in the world, called China. Back during the earlier boycotts, the PeopleÕs Republic of China was acting in true proletarian form--legions of bell-ringing bicycles, run down busses, and army trucks were the norm. Today we are talking about the Chinese Mainland weighing in as the worldÕs third largest energy consumer with wider individual auto ownership. Energy moreover, about half imported, fuels ChinaÕs impressive economic growth.
Combine this with a global economic upturn and you see why demand for energy has been on the increase.
The Saudis are realists. If prices go higher, our dangerous dependence on Òcheap Arab oilÓ may focus and force Americans at long last to consume less, prospect for more domestic oil, and find realistic alternatives. This is not in Saudi ArabiaÕs national interests. The KingdomÕs geo-political significance will equally decline in direct proportion to our new petroleum suppliers such as Russia and Mexico.
Then thereÕs Iraq. Given IraqÕs reserves are second globally to Saudi ArabiaÕs, and Iraqi petroleum production is producing again at pre-war levels, there are medium term signs that Iraq can produce well about the current 2 million barrels a day.
Thus itÕs in SaudiÕs best interests to snooker us with cheaper petroleum prices so that we keep our dangerous dependency. ItÕs in AmericaÕs interests to wean ourselves away and develop our domestic production and alternative energy.
John J. Metzler is a U.N. correspondent covering diplomatic and defense
issues. He writes weekly for World Tribune.com.  |
