Tag: Oil

US Loses Influence Over Saudis

For decades, Saudi Arabia worked with its dominant customer, the United States, to keep world oil markets stable and advance common political goals.

But the surging price of oil, which soared more than $10 a barrel Friday to a record-high $138.54, has made it plain that those days are over. New forces, including a weak dollar and an oil-thirsty Asia, have blunted the United States’ leverage and helped sour the two countries’ relationship.

As gasoline prices have risen, the White House has unsuccessfully exhorted the Saudis to step up production, and Congress has threatened retaliation. But the situation now is a far cry from the days when the U.S. economy dominated the direction of the petroleum market.

But the Saudi government has been dismayed by the consequences of the war in Iraq and by what it sees as a weak Bush administration commitment to the Palestinians.

The relationship is shaping up as a political issue for the fall campaign, certainly among congressional candidates and perhaps among presidential candidates.

With a 20-million-barrel-per-day habit, the U.S. remains the world’s largest oil customer, even though its daily consumption over the years has dropped from one-third of total daily production to one-fourth.

But the U.S. can no longer guarantee on its own that producers will have the markets they need for their oil. Nor can the Saudis, alone, ramp up production in sufficient amounts to stabilize prices.

China and other Asian nations now use about 17 million barrels a day. That’s up more than 20% since 2003, and booming growth is expected to continue
The Saudis helped the United States for years as “doves” within the Organization of the Petroleum Exporting Countries on the issue of oil prices. They were willing to moderately increase production, fearing that high prices could cause the United States and others to seek alternate supplies or cut consumption, as happened in the 1980s in reaction to the oil price shocks of the 1970s.

But attitudes have been shifting. Many believe the Saudis have grown more interested in conserving their supplies for later generations, and confident that if U.S. consumption drops, the economies of China, India and others will take up the slack.

By the end of 2007, it was also apparent that the Saudis no longer believed they could substantially affect prices by increasing production. Now, Saudi oil experts believe that the price run-up is due to such factors as investor speculation, the weak dollar and limited output from such key producers as Iraq, Iran and Venezuela.

U.S. lawmakers, meanwhile, have proposed various measures to force the Saudis to boost production. One, sponsored by Senate Democrats, threatens withdrawal of a proposed $1.4 billion in pending arms sales.

All in all, it appears that the Saudis are fed up with Washington and its policies.

New Survivalism?

We had a war with communism that scared a few, then there was the Y2K thing and now some are seeing the end approaching because of the energy crisis that is possibly approaching.

Convinced the planet’s oil supply is dwindling and the world’s economies are heading for a crash, some people around the country are moving onto homesteads, learning to live off their land, conserving fuel and, in some cases, stocking up on guns they expect to use to defend themselves and their supplies from desperate crowds of people who didn’t prepare.

The exact number of people taking such steps is impossible to determine, but anecdotal evidence suggests that the movement has been gaining momentum in the last few years.

These energy survivalists are not leading some sort of green revolution meant to save the planet. Many of them believe it is too late for that, seeing signs in soaring fuel and food prices and a faltering U.S. economy, and are largely focused on saving themselves.

Some are doing it quietly, giving few details of their preparations — afraid that revealing such information as the location of their supplies will endanger themselves and their loved ones. They envision a future in which the nation’s cities will be filled with hungry, desperate refugees forced to go looking for food, shelter and water.

These survivalists believe in “peak oil,” the idea that world oil production is set to hit a high point and then decline. Scientists who support idea say the amount of oil produced in the world each year has already or will soon begin a downward slide, even amid increased demand. But many scientists say such a scenario will be avoided as other sources of energy come in to fill the void.

So it may be time hoard your MREs left over from the last natural disaster.

No Oil No Guns

BuThis is a concept that I wrote about a couple months ago in my other blog, studies and observations.  I have always said that the US should use their generous aid to other countries as leverage.

A group of Democratic senators wants to make a massive arms sale to Saudi Arabia contingent on getting cheaper oil, reports AFP. “We are saying to the Saudis that, if you don’t help us, why should we be helping you?” says Chuck Schumer, a Democratic senator from New York. “We are saying that we need real relief, and we need it quickly. You need our arms, but we need you to cooperate and not strangle American consumers.”

At issue is an arms package worth some $20 billion. The group has introduced a resolution in the Senate to block the pending sale. When the controversial deal was announced last July, Noah wrote that he was “utterly, completely flummoxed by the Bush Administration’s decision to sell $20 billion worth of arms to Saudi Arabia and other Gulf potentates.”

But the question would be, would the Pres veto any such moves?  And then would the Congress have enough guts to override?

Oil Reaches More New Highs

A Japanese oil tanker was damaged Monday when it was attacked by a small boat in Middle Eastern waters off the coast of Yemen, the tanker’s owner said. Word of the attack helped to drive world oil prices to a new record.

The attack rattled the nerves of global energy traders, sending the price of benchmark light, sweet crude to a record $117.40 per barrel. Oil prices had also briefly touched $117 per barrel last week, after rebels attacked a pipeline in Nigeria, Africa’s largest oil producer.

Okay this is a daily occurrence, but now I want to start a prediction that oil will hit $125 a barrel by July 4th.  Anybody else want to join in?  Come on what you got to lose?

Nationalize Oil

This topic will not be very popular with corporate types, but think of all the good that could be done with those obscene profits?  The Big 4 oil companies have made $123 billion in profits.

I am working on a piece about this subject and will post it as soon as it is finished.

Think of all the infrastructure good that could been done will nationalized oil and the end of an obscene war?   Maybe then the American people will get the attention they have needed for a generation.