Biting the hand that fuels you

Bush’s call to end Middle East oil imports reflects growing consumer-supplier tension. The failed terrorist attack at Abqaiq should show the world how hard it is to shut down the oil industry with bombs and how good Saudi Arabian security is. Unfortunately, it will probably just fuel the anti-Middle East fires that are burning brightly in Washington.

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By  Nicholas Wilson Published  March 2, 2006

comment|~||~||~|The failed terrorist attack at Abqaiq should show the world how hard it is to shut down the oil industry with bombs and how good Saudi Arabian security is. Unfortunately, it will probably just fuel the anti-Middle East fires that are burning brightly in Washington.

When US President George W. Bush talks about his dream of an economy that isn’t powered by Middle East oil he gives the impression that he doesn’t understand economics.

Of course, it may be that he’s simply playing to a crowd he thinks doesn’t understand the subject — his voters.

Either way it’s disturbing that he makes public statements about Uncle Sam just turning his back on Saudi oil and walking off into an economically rosy sunset as if there’ll be no repercussions.

He wasn’t prepared to tell the truth to his gas-guzzling, SUV-driving electorate about what the future holds for them — high fuel prices — and tell them to look in a lifestyle mirror for the cause. Instead, Bush blamed some of the world’s key oil players.

He provoked Saudi Arabia’s Oil Minister Ali Naimi to say his country will bear Bush’s thoughts in mind when considering whether to boost production. “What concerns us is all the talk about not wanting our oil,” he said. And the Saudi ambassador to the United States, Prince Turki Al Faisal, seemed to wonder whether Bush had a personal grudge against Middle East oil, and said he would “seek an explanation” from the White House.

Equally disturbing are the little-noticed announcement by Sweden that it intends to be crude-free within 15 years, and the consuming nations’ keen interest in nuclear power.
All show that energy markets are changing in a way that makes importers unhappy. And it’s not just about oil — the West had a few near squeaks with its gas supplies this winter, too.

In addition to Europe’s well-publicised Russian scares in January, the United States also came within a hair’s breadth of running out of its winter gas imports. Cambridge Energy Research Associates said, “We were lucky this winter. If it was colder around the country, we would not have had enough gas supply to meet industrial demand.”

An analyst for the American Gas Association said an increase in the supply of natural gas is probably not coming anytime soon, and that no other resource is in a position to make up the difference. “LNG is plan A,” he said. “There is no plan B.”
Fortunately, at least Bush didn’t complement his philosophical take on US energy supplies by saying he would substitute imported oil with imported gas. And he seems to have given up on the original Bush-Cheney plan, which only envisioned hunting for domestic energy and peppering wildlife reserves with more wells to drill the United States out of its dependency on oil imports.

Instead he wants to focus on more research and technological fixes, such as hybrid petrol-electricity powered cars and ethanol fuel from maize.

Bush’s vision of achieving economic prosperity without the region’s oil looks like a pipe dream that is suspiciously similar to former US President Jimmy Carter’s in 1979, when he said: “Beginning this moment, this nation will never use more foreign oil than we did in 1977 — never. I am tonight setting the further goal of cutting our dependence on foreign oil by one-half by the end of the next decade — a saving of over 4.5 million barrels of imported oil a day.”

Well, Jimmy didn’t fix it. And foreign oil accounts now for 58% of total US consumption, a figure likely to rise to 68% by 2025.

It’s not that the Bush plan isn’t possible. As The New York Times put it, “Mr. Bush described his dream of replacing 75% of Middle East oil as if it were some monster challenge, like the Marshall Plan or a mission to Mars. It’s not. An increase in fuel-efficiency standards to 40 miles per gallon in ten years — a reasonable expectation, with no new technology — would save about 2.5 millions barrels a day, which is just about what we import from the Middle East now.”

What he doesn’t get, or at least doesn’t want to tell Americans, is that oil is sold globally, and someone buying a barrel of Saudi oil in China, India or Botswana not only pushes up the price of Saudi oil but also that of Mexican, Venezuelan and Canadian crude — the US market suppliers — and it also hikes the price of Alaskan and Texan petroleum.
Bill Clinton beat Bush’s father, who focused on his victory in Iraq, with a campaign whose mantra was “It’s the economy, stupid.”

Unfortunately, Bush junior doesn’t seem to have a complete grasp on the economy either. He should be very, very careful about wishing to kick the addiction to Saudi oil and kick his strategic partner while he’s at it, because he might just lose a trusted supplier.

And energy-thirsty Asian leaders who jostle for the region’s oil give visiting Saudis a royal welcome instead of saying they don’t want their oil.||**||

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