Note to media/Bush

Saudis/OPEC don't control the price of oil any more

Posted by Joseph Romm (Guest Contributor) at 11:21 AM on 17 May 2008

Read more about: energy | oil

With Bush going to Saudi Arabia to beg -- again -- for lower prices, the media is gaga over a confrontation that has about as much significance as a Rocky Balboa fight.

Even the venerable NYT just published an article, "Bush Rebuffed on Oil Plea in Saudi Arabia," that opens, "With the price of oil hitting record highs, President Bush used a private visit with King Abdullah to make a second attempt to persuade the Saudis to increase oil production and was rejected yet again."

Unlike the 1970s and 1980s and even much of the 1990s, neither OPEC nor the Saudis any longer control the price of oil.

If any country had a million barrels a day of (sellable) spare oil capacity, they could make more than $100 million a day selling it, even if that much new oil dropped prices 20%, which it probably wouldn't.

Who would sit on that kind of money? Yes, the Saudis are selling over 8 million barrels a day, so they don't really need the money. But if they have any significant excess capacity, it is sour or high-sulfur crude (see the other experts on the full CNBC interview here). Such crude is not currently in demand: "Many refineries are not set up to process such crude because it is more difficult and expensive to refine into products."

Even the WSJ, which published the figure on the right, headlined the October article, "OPEC's Lever Loses Its Pull on Oil" (subs. req'd). As I wrote back then, "We cannot be far from $100+ oil." Duh!

By the way, the Saudis are much slier than Bush, national security adviser Stephen J. Hadley, and most of the press [okay, that's not saying much]. As the NYT and AP reported, Hadley told reporters:

"What they're saying to us is" that "Saudi Arabia does not have customers that are making requests for oil that they are not able to satisfy."

What a clever way of sounding to those not in the know [this means you -- Bush, Hadley, and the media] like they are sitting on extra capacity that they could sell, when in fact what they are really saying is that they have no customers for any extra capacity they have.

The situation is not going to get any better soon until the nation and the world develop and deploy at scale a high-volume, low-cost, carbon free alternative fuel.

As I said:

In January, Jeroen van der Veer, chief executive officer of Royal Dutch/Shell, e-mailed his staff that the world will peak in conventional oil and gas within the decade. He wrote: "Shell estimates that after 2015 supplies of easy-to-access oil and gas will no longer keep up with demand." It used to be unheard of for oil executives to talk about limits to oil production. Now it happens all the time.

John Hess, chairman of Hess Corp., a global oil and mineral exploration company, said recently, "An oil crisis is coming in the next 10 years. It's not a matter of demand. It's not a matter of supplies. It's both."

We could solve this problem in the medium-term (i.e. by the 2020s) if the next president were not John McCain and if he or she aggressively pursued the transition to electric-powered cars (see here and here) -- but this would probably not be fast enough to avoid 50% to 100% higher oil and gasoline prices in the next decade.

Could we lower prices in the short term? That, I'm afraid, will have to be the subject of another, longer blog post.

This post was created for ClimateProgress.org, a project of the Center for American Progress Action Fund.

For story: Note to media/Bush
5 Comments | Post a Comment

A barrel saved is a barrel earned.

Saudi oil production 9.5 million bbl./day. US oil consumption 20.7 Million bbl./day. Can electric cars scale fast enough? Can not driving scale faster (carpools, mass transit, etc.)? Cutting US oil consumption by 50% is the same as creating another Saudi Arabia in the world, with carbon-free reserves.

by sunflower at 1:03 PM on 17 May 2008

BRAAAAA-ZIIIIILLLEEE!

Brazil Oil Finds May End Reliance on Middle East, Zeihan Says

http://www.bloomberg.com/apps/news?sid=aBUoYKhu7PWk&p ...

April 24 (Bloomberg) -- Brazil's discoveries of what may be two of the world's three biggest oil finds in the past 30 years could help end the Western Hemisphere's reliance on Middle East crude, Strategic Forecasting Inc. said.
Saudi Arabia's influence as the biggest oil exporter would wane if the fields are as big as advertised, and China and India would become dominant buyers of Persian Gulf oil, said Peter Zeihan, vice president of analysis at Strategic Forecasting in Austin, Texas. Zeihan's firm, which consults for companies and governments around the world, was described in a 2001 Barron's article as ``the shadow CIA.''

Oil Is So Hot! http://oilismastery.blogspot.com

by jabailo at 3:59 PM on 17 May 2008

Who is in control?

Consumers are the ones controlling the price of oil. They absolutely control demand.

We stop buying oil, the price will drop. It's just that simple. Plugin, turn on, drop out. The medium is the message.

A plugin bike, zero oil. A plugin hybrid car. 10% of normal oil consumption. Electric mass transit zero oil. Even oil powered mass transit is a fraction of oil used in cars.

Put the fear back in the faces of the oil analysts and their hedge fund cronies. Stop buying oil. Boycott oil. Reduce total consumption to 10% of present levels.

http://amazngdrx.blogharbor.com/blog

by amazingdrx at 10:17 PM on 17 May 2008

Oh yeah

And natural gas/biogas powered trucks and trains.

Suck on that tailpipe oh mighty OPECers.

http://amazngdrx.blogharbor.com/blog

by amazingdrx at 10:19 PM on 17 May 2008

WE DID THIS TO OURSELVES

We are responsible for the high prices because we are willing to pay them without acting on instinct and refusing to play the game!

Face it in a perfect world we would all be off the grid with the smallest carbon footprint we could muster. Unfortunately we cant all afford to buy a new PRIUS and PV panes for our homes yet.

IF YOU ARE TIRED OF PAYING A RIDICULOUS PRICE PER GALLON AT THE GAS PUMP AND YOU REALLY CARE ABOUT THE EMISSIONS OF YOUR CURRENT AUTOMOBILE PLEASE PAY CLOSE ATTENTION TO THIS MESSAGE.

I am starting this e-protest as a reasonable means of reaching 300,000,000 americans and at least as many of our global cousins.
It is very simple......

We as a global culture MUST WORK TOGETHER......

This means that we must all AGREE to do one thing as a group.....

Right now you are asking yourself HOW CAN I CHANGE THE PRICE OF GAS? HOW CAN I PERSONALLY LOWER THE IMPACT OF MY CAR ON THE PLANET?

Simple.... Join together and collectively act.....

DO NOT BUY GAS FOR ONE WEEK EACH MONTH!!!

I am calling upon all individuals who purchase gas to not buy gas for one whole week.

Fill up on the last week of the month and COMMIT to not buy gas or any products from a gas station from the 1st of each month to the 7th of each month.

I know that I am asking for a huge change in your weekly lifestyle. It will mean carefully considering the number of miles that are absolutely necessary to drive in that week
and not driving unless it is an absolute necessity.

One more thing and this is THE big one. This will only work if every person who receives this message passes it along to every person on their email list.
This is the most critical part. The average person has around 70 email addresses in their contact list, If every person I sent this to forwards it to their whole contact
list that will be over 5000 people.....if these all forward it to about 70 people thats over 340,000 people, if these all participate it will be over 24,000,000 people.
That is only after the third generation of emails if each of these 24,000,000 participate, that is almost 1.5 billion people.

PLEASE DON'T DISCARD THIS EMAIL, SEND IT TO EVERYONE YOU KNOW, AND FOLLOW UP WITH THEM TO SEND IT TO EVERYONE THEY KNOW!

I AM NOT ASKING FOR MORE THAN A COUPLE OF HOURS OF YOUR TIME. THIS IS A SMALL PRICE TO PAY TO PREVENT THE OIL COMPANIES FROM
RAISING THE PRICE OF GAS TO MORE THAN THE HOURLY MINIMUM WAGE!!!!! NOT TO MENTION THE IMPROVED AIR QUALITY AND REDUCED GREENHOUSE GASES!!!!!

If you are not sure just how this could work think about how much impact
BIG OIL will feel if over 1,000,000 people stop buying their weekly gas just one week a month.

If you are like the average consumer and you fill up just once a week at around $50.00 and you multiply this figure by 1 million,
That's 50 million dollars a month that hits hard immediately. Now suppose this happens over the course of three to four months,
and the participation continued to escalate as I have outlined. The results would have to be in our favor. The number of gallons of fuel processed and delivered are carefully
calculated by the oil companies based on the number of gallons sold in the previous months and years...
If the fuel consumption goes down the ammount produced and on standby becomes a backlog situation...
If there is a glut of fuel left over at the end of each month for a few months the Oil Companies have no choice but to lower the price to get the fuel moved!
The result LOWER PRICES AT THE PUMP!!!!! IT"S HIGH TIME WE AS CITIZENS OF AN EMERGING GLOBAL SOCIETY
STARTED TO PUT THESE COMPANIES ON NOTICE. WE ARE THE ONES WHO ULTIMATELY CONTROL THE MARKET BECAUSE WE ARE THE MARKET!!!!!!

Please take this seriously We are only going to change the status quo if we refuse to let the suppliers dictate the rules.

by Anvil at 4:05 AM on 23 May 2008

ADVERTISING POLICY

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