http://www.usatoday.com/news/world/2008-05-15-saudi_N.htm
Saudis reject Bush's plea to increase oil output.
Saudi Arabian leaders made clear Friday they see no reason to increase oil production until their customers demand it, apparently
rebuffing President Bush amid soaring U.S. gasoline prices.
During Bush's second personal appeal this year to King Abdullah, Saudi officials stuck to their position that they are already
meeting demand, the president's national security adviser told reporters.
"What they're saying to us is ... Saudi Arabia does not have customers that are making requests for oil that they are not able to
satisfy," Stephen Hadley said on a day when oil prices topped $127 a barrel, a record high.
The Saudi government indicated that it is willing to put on the market whatever oil is necessary to meet the demand of its
customers, Hadley said.
But even then, he said, Saudi leaders say increased production would not dramatically reduce pump prices in the United States.
The Saudis are investing in ways to increase oil production over time. Officials told Bush they are doing "everything they can do"
for now to address a complicated market.
Hadley said the Bush administration will take the explanation back to its own experts and "see it if conforms."
If precedent is any indication, however, Bush was unlikely to get much sympathy from the Saudi monarch. He asked Abdullah in January
to increase production and was rebuffed.
"I hope that President Bush goes in with low expectations," says Robert Ebel, an energy analyst at the Center for Strategic and
International Studies. "He's going to be disappointed if he doesn't."
Bush acknowledges that raising output is difficult because the demand for oil - particularly from China and India - is stretching
supplies. Also, economists say prices are being driven up by increased demand, not slowed production.
As fuel prices set records almost daily, U.S. politicians facing fall elections want to show voters they are taking action. Two
congressional proposals, though, could put a crimp in the United States' relationship with Saudi Arabia, one of its key allies in
the Middle East.
"The politicians are under pressure to do something, anything, and so they're thrashing around," says energy consultant J. Robinson
West of PFC Energy. "Unfortunately, there may be some unintended consequences of their actions."
One bill would freeze four highly sought-after arms deals, including a $123 million shipment of sophisticated laser-guided smart
bomb kits that would give Saudi airstrikes pinpoint accuracy. Another would give U.S. prosecutors the authority to apply U.S.
antitrust laws to oil-producing countries.
New York Sen. Charles Schumer, a Democratic sponsor of the first bill, says the legislation is intended to give Bush leverage in his
meeting at the Saudi monarch's horse farm.
"We cannot settle for a smile or a handshake or even a glimpse into his soul," Schumer said. "We need a commitment to pump more
oil."
Congress overwhelmingly passed a bill Wednesday telling Bush to stop depositing oil in U.S. reserves. That would put another 70,000
barrels a day on the market, a trickle of the more than 20 million Americans consume daily.
"It's all political posturing, and the world is listening to America say these things, and it may mean strained diplomatic relations
in the future," says Elizabeth Rosenberg, an analyst at Argus Media, an energy news agency.
Many experts say bills such as Schumer's are short-term fixes at best and miss the larger problem. Saudi Arabia is not to blame for
higher oil prices, West says.
"Bush is under political pressure domestically and he understands the situation internationally, so he'll deal tactfully with the
Saudis," West says. "And the Saudis also understand Bush's position, so it will be a very tactful exchange, but it's unrealistic to
expect any results."
If anyone is doing the right thing, West says, it is Saudi Arabia, the one oil-producing country that is investing significant
percentages of its oil profits in developing new production capabilities.
"Saudi Arabia is the last country we should be targeting," West says.
IN WASHINGTON: GOP abandons Bush on food, energy issues
Rising oil prices are the product of skyrocketing demand fueled by rapid economic growth in China, India and, to a lesser extent,
Persian Gulf states. Saudi Arabia has an estimated 2 million barrels a day of spare capacity, but much of it is undesirable heavy
crude, which is expensive to refine and less suitable for conversion into gasoline.
"They are trying to walk the fine line in which oil prices stay high so they make a lot of money, but not so high that people slow
down in their consumption," Rosenberg says.
Bush's desire for more Saudi oil will receive an unsympathetic response as long as the United States is unwilling to increase supply
or reduce demand, West says. Bush has refused to stop adding oil to the national reserve stockpile. The administration also has
refused to drill in the oilfields in the eastern Gulf of Mexico because Florida objects.
"It would appear that the tourism and real estate industry of Florida is more important than our energy security and, frankly, Saudi
doesn't understand why America is making demands on everyone else when they're not prepared to do the same," West says.
"Politicians don't want to explain to people that we have to do something for ourselves," says Adam Sieminski, the chief energy
economist for Deutschbank. "We have to have tighter fuel-efficiency standards for our automobiles, we have to build more nuclear
energy plants, and we have to drill more gas fields in the Gulf off of Florida."
Beyond oil, Iran also dominated the meeting between the president and the king. The two shared a concern over the recent in violence
in Lebanon, where Hezbollah overran Beirut neighborhoods last week. The display of military power by the Iranian- and Syrian-backed
Hezbollah, which the U.S. considers a terrorist organization, resulted in the worst internal fighting since the end of Lebanon's
1975-90 civil war.
Hadley said the leaders shared concerns the recent events would "embolden Iran." The U.S. and Saudi Arabia, he said, "are of one
mind in condemning what Hezbollah did in bringing pressure on the duly elected government of Lebanon."
"Iran, working directly and through Syria, was very much behind what happened in Lebanon over the weekend and it is another example
of Iran taking actions that are contrary to the interests of those in the Middle East who want peace, security and freedom," Hadley
said.
On Thursday, the Hezbollah-led opposition and U.S.-backed government reached a deal to end the violence after Lebanon's Cabinet
reversed measures aimed at reining in the militants.
Contributing: Charles Levinson reporting from Jerusalem, Associated Press
Jan Rasmussen