The Why of Chokingly High Oil Prices: Bush Together with Saudi Arabia Spells Disaster for America

[babylonsister]

http://www.huffingtonpost.com/raymond-j-learsy/the-why-of-chokingly-high_b_101262.html

Raymond J. Learsy

The Why of Chokingly High Oil Prices: Bush Together with Saudi Arabia Spells Disaster for America


Posted May 12, 2008 | 05:29 AM (EST)

snip//


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.

[thunder rising]

1. OMG, the last session those two had the price jumped a buck!

[StClone]

2. Iraq oil off the market

There has been conjecture with some support that along with the other reasons to invade and occupy Iraq was to eliminate Iraq as an oil source. Limiting the supply from Iraq made the Saudi oil that much more valuable.

[Lerrad]

3. I think you sure hit on something here.

"Limiting the supply from Iraq made the Saudi oil that much more valuable."

I have never seen this reason for invading Iraq mentioned before. I think it is the MAIN reason.

[babylonsister]

5. McCain inadvertently mentioned it:

http://firstread.msnbc.msn.com/archive/2008/05/02/974014.aspx

"My friends, I will have an energy policy that we will be talking about, which will eliminate our dependence on oil from the Middle East that will -- that will then prevent us -- that will prevent us from having ever to send our young men and women into conflict again in the Middle East,” McCain said.

[bluesmail]

4. That makes sense, and in a different way. I believe it.

[Donnachaidh]

13. EXACTLY what has been happening

And we won't see any of that oil until the US Companies get an ironclad lock on it. At the highest possible rate.

Republican privateers strike it rich!

[Arctic Dave]

6. The Saudi king will congradulate bush for being the

best and cheapest investment they ever made.

[agincourt]

7. Bush would destroy America,

to fatten and enrich medieval Saudi Arabia. This is one of the few places people get that. If you look at his actions instead of the bullshit we're told, Bush is a servant of Saudi Arabia. Genuine indeed. How can anybody defend him?

[bhikkhu]

8. There are alternative explanations

And the best source I have found for oil production figure is; http://www.eia.doe.gov/emeu/international/oilproduction.html under the "United States, Persian Gulf, Total OPEC, and World Total, Most Recent Months and Years"

While oil and all commodities have probably been run up partially by speculative opportunists, there remains the possibility that shortages are real. We know, for instance, that world food stockpiles per capita are at a 35 year low. Production is down and prices are very high.

Also we have seen a rapid oil-dependent economic expansion throughout the most populous region of the globe - Asia. If you look at oil rig utilization and industry demand for engineers and specialists, the oil producing nations have been running flat-out with what is available to expand production, while a large part of production still depends upon aged and declining oil fields. The North Sea is in terminal decline, and Europe's big source is going away. Cantarell is in terminal decline, which supplied 15% of US imports. Venezuela is in decline, except for heavy sulfurous crude. Indonesia is the first OPEC member to drop out as no longer able to produce enough oil for export. Oil is a finite resource, and one that we may no longer be able to rely upon for yearly increases.

This is not to say that supply is not being "shut in". The problem is first that we cannot discover whether it is a fact or not, and the second is that we can't do anything about it if it is a fact. Fact and fiction have the same effect upon an oil-addicted nation, information starved nation...

We need to change our lifestyles to be less oil dependent. It is a choice now, but at some point soon, whichever is the truth of the above possibilities, it will be obligatory. I'd rather act by free will, and with some hope and good expectations for myself, my daughters, and my country.

[quiet.american]

10. All well and good -- the thing is, this country *is* indisputably being run by "oil men."

George Bush, Dick Cheney, Condoleeza Rice. All "big oil" people. The price of oil did not become this obscene until they stole into office. The Bushes are the American cousins (so to speak) of the Saudi royals. There really is not much mystery as to why every single dime of profit is being squeezed out of oil prices before Bush leaves office.

[barbtries]

9. why do the bushies hate america

[cornermouse]

11. Well, that would appear to give the oil company's refusal to build

new refineries an out from responsibility, wouldn't it.

[Historic NY]

12. And your forgetting the ethanol factor......

which in *'s world is taking up the slack. Every gallon we produce means to OPEC one less gallon of oil they sell to us. In reality ethanol as derived from corn is driving up the price at the pump also by leaps and bounds. Were talking billions of barrels of oil taken from circulation that could lower the price. The production of ethanol is expensive and requires oil to sustain it. Were getting scammed all the way around.

[Hydra]

14. I'm glad some people are spelling it out

Because I'm getting sick of the people who are inadvertently carrying water for Bushco by screaming "PEAK OIL!" over and over again.

Try artificial shortage- Cheney's favorite method of profit.

We have alternatives for oil...but we have some very moneyed up people standing in the way of them.