Bush fails to win Saudi help for oil increase big enough to cut high gasoline prices

Saturday 17th May, 04:26 AM JST

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SuperLib at 07:25 AM JST - 18th May

Actually, oil has been going up for a lot of reasons. Mostly people are guessing that's it's a mix of a weak dollar plus the increase in funds flowing into oil speculation since the other markets are doing badly. Supply and demand play their part, but the price has gone up 85% in the last year. The world's oil demand doesn't change that quickly.

But it is interesting to watch people choose whichever reason helps their agenda most.
apecNetworks at 09:06 AM JST - 18th May

I am surprised no one spells out what is actually happening at the macro level. This is not complicated, but oil usage is not clear.

All great powers in the past has gone thru this to varying degrees, and it seems the US is no exception.
apecNetworks at 09:08 AM JST - 18th May

Correction "All great powers in the past haVE...."

I do need a proofreader!!!!!
romulus3 at 08:20 PM JST - 18th May

bush is well and truly in bed with the Saudis. He is making them rich, as promised at the expense of rich Americans. His whole presidency has been about looking after his friends interests. Its just another Mafia but on a huge huge scale.
super delegate at 08:30 PM JST - 18th May

"bush is well and truly in bed with the Saudis."

Russia is doing quite well with oil at its current prices, as are Canada and Norway

So is Bush well and truly in bed with them as well?

The Saudis built Clinton a huge library and have basically bought the Middle Eastern Studies chairs at most of our major universities.If you knew anything about America you'd know that academia is not pro-Republican and certainly not pro-Bush.

It's the Democrat party that will not allow drilling in Alaska or on the coasts or off of Florida, and it's the Democrats that just last week shot down proposals to even allow US companies to try and develop oil shale resources in places like Wyoming and Colorado.
nonacnon at 08:44 PM JST - 18th May

I think it is in the interest of oil companies to have high oil prizes and micro chipping the ordinary sheep. ID card, biometrix database, surveillence society.

The damnd for oil is there. That is also what inflates the oil prizes as well as the deflatiion of the dollar. It is problematic for countries who export to as US have less purchase power now than before.

Bush is making profit from selling arms, contractors and oil companies. Because the country is in war he will use that as a pretext to take personal liberties from citizens and call people who oppose un patriotic. The steps have come gradually. US already have Patriotic Act and some millitary act where ordinary citizens can be sentenced outside the court of law by the government which is unheard of in democracy as the founding principles of democracy is that the cabinet, parlament, court are to be seperate.Also how someone can be withheld for years without a sentence and a charge goes against the popular opinion on what democracy is.
Betzee at 10:52 PM JST - 18th May

This was written in late 2004 and the trend has only become more pronounced since then:

Oil prices and the dollar have made the news lately. Oil prices have risen, while the dollar has simultaneously plummeted against the euro....Because oil prices and the dollar have moved in opposite directions, the increase of oil expressed in euros instead of dollars has been less pronounced than the oil price increase in dollars. This may not be coincidental. Oil producers sell their products in dollars. These dollars are used to purchase other goods in international markets. As the dollar lost its value starting in 2002, oil producers could afford to buy less in international markets with their dollars....

Dollars being the currency in which oil is priced allowed the U.S. to go off the gold standard under Nixon (complicated story). Now some oil-exporting countries, principally Iran and Venezuela, are pushing OPEC to abandon the dollar and switch to Euros (or Yen) pricing. If they succeed it would be disastrous for the United States. But it's our government's responsibility to maintain the dollar as an attractive currency for international pricing. This means cutting the deficit....
romulus3 at 10:53 PM JST - 18th May

super,

the others are just a by product of Bushes centric economics. lucky them
Betzee at 11:01 PM JST - 18th May

Furthermore, the Saudis only need a competitive price to be higher than that for extraction of their product, plus any refinement costs and a margin for profit, in order to keep their in-ground reserves useful. Presumably these criteria were met when oil was at $40 a barrel, so it seems to me that they have a lot of latitude.

They do have a lot of latitude. Things looked very different for them a decade ago when there were predictions the price of a barrel of oil might drop to USD 5 (I'm serious).

Now we're in a downward spiral in which oil prices have to go up to compensate for the declining value of the dollar which in turn drives it lower. This is not good for the United States, to say the least.

As for alternative technologies, the market has to send a very strong signal to entrepreneurs and venture capitalists: we want to wean ourselves from dependency on oil period rather than simply drill in new locations (Alaska, the American Southwest). Otherwise nobody is going to invest.
nonacnon at 12:06 AM JST - 19th May

The reason for the high oil prizes is as other posters have mentioned is due to a deflating Dollar and increase in oil demand. The oil production will peak in a few years and from then the production will decrease while demand will stay the same or rise. Oil countries are ditching the deflating petro Dollar and using solid currencies such as Euro and Yen thus weakening the Dollar even more while US has to borrow money from China to be able to maintain their war in Iraq while the country is heading towards bankrupcy.
Betzee at 12:30 AM JST - 19th May

The decline of the dollar has been evident for a while, it's not an overnight phenomenon. For a long time the Bush administration was indifferent or claimed it was a good thing because it made American exports cheaper. The thing is, the United States doesn't really export anything except in categories such as aircraft, where price is not the determining factor in Boeing securing deals over Airbus.
nonacnon at 01:28 AM JST - 19th May

A crack in the petro Dollar will have concequences for the US enterprise especially the millitary and the war in Iraq. As US does not export much consumer products compared with Japan or Europe and has a huge trade defecit they could get away with it as the Dollar was kept artificially high due to the petro currency. With Iran and other countries now trading oil in Euros and Yens the Dollar is expected to sink even more. The Feds then print out more Dollars and thus the Dollar sinks even more. The cost of war in Iraq is too much for the US economy. To finance the war US needs to borrow money from China and their debt becomes even bigger. US is in a recession. The question people ask is how big of a recession are they in. If the country is in recession what you need to do is spend less than you earn and not the other way around. US will need to cut down on what isn't sustainable for the economy.

Saddam changed the oil currency the year before the US lead invasion and now that Iran has changed from the Dollar to the Yen and Euro US is acting extremely aggressive towards Iran.
presto345 at 01:37 AM JST - 21st May

For decades I have been reading about the difficulties in developing alternative energy sources, like solar, geothermal and wind energy, because of the cost perspective. These sources can now be developed as crude oil prices have soared out of proportion, but things are still moving slowly because it is 'feared' prices will drop again. Wishful thinking, as long as speculators are allowed to have their way and disrupt markets and economies. Bush did not foresee what the Iraq invasion legacy would be and how much it would cost the taxpayer, but had he known, he could have opted to spend the billions of dollars to develop the alternative energy sources and give the U.S. a tremendous edge in the field, but perhaps alienating the weapons industry?
Betzee at 10:19 AM JST - 22nd May

Tom Friedman had some interesting observations on this in his column today:

It baffles me that President Bush would rather go to Saudi Arabia twice in four months and beg the Saudi king for an oil price break than ask the American people to drive 55 miles an hour, buy more fuel-efficient cars or accept a carbon tax or gasoline tax that might actually help free us from what he called our “addiction to oil.”

The failure of Mr. Bush to fully mobilize the most powerful innovation engine in the world — the U.S. economy — to produce a scalable alternative to oil has helped to fuel the rise of a collection of petro-authoritarian states — from Russia to Venezuela to Iran — that are reshaping global politics in their own image. If this huge transfer of wealth to the petro-authoritarians continues, power will follow....

http://www.nytimes.com/2008/05/21/opinion/21friedman.html?hp
Zaphod at 01:10 PM JST - 22nd May

It is just so pathetic to see another Western politician crawl on his knees in front of the Saudi Wahabis, begging for more oil.

We know that the Western world is addicted to oil. We know that Saudi has most of it. We also know that Petrodollars from Saudi are financing the world-wide islamic jihad against us.

And we also know that only Western intelligence and technology, based on the free thought of enlightenment, freed from the suffacting shackles of islamic doctrine, would allow us to find alternative energy sources.

And instead of calling for a Manhattan-project style emergence program to get AWAY from the dependence of the medieval Arab Jihadists, Bush is kissing their behinds, asking to please increas oil output.

This is so sick, I want to throw up.

Alas, from next year we can see Obama or Hillary do the same act.