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Analysis

U.S. gas prices not important to Saudis

WASHINGTON — When President Bush, once a Texas oilman, asked Saudi Arabia to pump more crude, he may have forgotten that the Saudis have a long memory. And that made it a good bet his mission this past week would produce a dry hole.

In the 1990s the OPEC cartel was eager to pump more oil in a grab for cash as prices — like today — were going up, passing what then was viewed as a healthy sum in the $20-plus range. But then the Asia economic crisis struck and oil prices plummeted to below $10 a barrel.

Saudi Arabia and other producers got burned.

"They remember that and they're not going have that happen again," says Robert Ebel, an international energy expert at the Center for Strategic and International Studies.

This time Bush in his trip to Riyadh and his private meetings with Saudi King Abdullah walked away with a trickle of oil, but not a gusher.

The Saudis said they would pump an additional 300,000 barrels of crude next month. They also made a point that the decision had been made a week ago, and not in response to Bush's visit.

Energy analysts saw it as a token, and, in fact, oil markets responded by boosting prices a few more dollars to $126 a barrel.

A dozen years ago OPEC, led by the Saudis, was more likely to loosen its oil spigots, often cheating on the oil cartel's self-imposed quotas. Today the primary goal is keep the supply and demand in close balance — and guard against prices tanking.

So when Bush made his second personal appeal this year to Abdullah in search of ways to ease the pain for American motorists from soaring gasoline costs, the Saudis told him there's plenty of oil already available. The additional 300,000 barrels — bringing Saudi Arabia production to 9.4-million barrels a day — was simply to meet customer needs in June, officials explained.

Bush may not have agreed, but despite his close personal relationship with Abdullah, he wasn't going to get anything close to what he sought. For the Saudis this is pure business.

Eight years ago when Bush was running for president and the Clinton administration was trying to pry more oil out of OPEC, the future president said that as a former oilman he would "jawbone" the producers and get them to "open their spigots."

Bill Richardson, now the governor of New Mexico and then energy secretary, says he jawboned as best he could and "on several occasions they increased production and the price actually went down."

"They hated to see me coming, but they listened," said Richardson, adding that the Saudis and other OPEC countries "aren't terribly concerned about high prices." While Bush promised he would jawbone, said Richardson, "he never did it. … He never jawbones."

Ebel, a longtime international energy analyst, calls the rhetoric about jawboning OPEC "political talk" to mask a simple fact: There's little that oil-consuming nations — even the world's biggest — can do to force OPEC countries to produce more oil if they don't think it's in their interest.

"I don't think you can go over there, knock on the door with your hand out and say, 'I want more oil.' It's not going to happen," Ebel says.

H. Josef Hebert has covered energy and environmental policy since 1990.

U.S. gas prices not important to Saudis 05/17/08 [Last modified: Thursday, October 28, 2010 2:00pm]

    

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