Ever the loyal partisan, President Bush couldn’t pass up an opportunity to take a shot at Democrats in Congress even as the failure of his mission to Riyadh to seek additional Saudi oil production reinforced the realization that he is increasingly a lame duck. Ironically, looking beyond the political rhetoric, he has a point.
In Godfather-like fashion, assuring the President their decision was business and not personal and that world markets were well supplied, the Saudis politely, but firmly rejected his request for additional production. This marked the second time in four months Bush has traveled to the desert kingdom, and the world’s largest oil producer, only to be rebuffed as oil and gas prices continue their meteoric rise.
Well aware how the Saudi decision would play at home, Bush preemptively struck at Democrats in Congress. All but openly calling them hypocrites, Bush said, “"One of the interesting things about American politics these days is those who are screaming the loudest for increased production from Saudi Arabia are the very same people who are fighting the fiercest against domestic exploration……..and against expanding refining capacity.”
Hear, hear!!!
Kudos to the President for stating the obvious, however late in the game it may be. Only the Democrats in Congress would have the temerity to badger and berate someone else for not doing what they themselves refuse to do.
The Saudis have made their decision based on what is in their economic and strategic interests. You may not like it, but at least they’re honest about it. Remember, this is business, not personal.
The Democrats, on the other hand, have pandered to environmentalists and the NIMBY (not in my back yard) crowd of state and local officials while nationally we pay the price for their decision. They then turn around and blame everyone from the President to Big Oil to OPEC to Chinese and Indian drivers to Detroit to market speculators; everyone but themselves. While the Saudis and well-healed market traders and oil company CEOs are easy political targets, they are only part of a complex equation that the Democrats themselves are a part of as well. As Queen Gertrude so aptly observed, “The lady doth protest too much, me-thinks.”
Had Congress and Bill Clinton had the intestinal fortitude to open up ANWAR and the continental shelves to responsible exploration and development back in the 1990s, there would be anywhere from two to five million additional barrels of domestically produced crude on the market today.
Correct me if I’m wrong, but I believe Madame Speaker Nancy Pelosi was a member of Congress during that time. Clearly, like so many of her Democratic colleagues, she placed the environmentally sensitive beliefs of her constituents ahead of the pocketbook interests of the rest of the country.
Lest my liberal friends begin howling about the Republican Congress of the 90s and the Bush administration of the last seven years, rest assured I hold them equally responsible and similarly guilty of a damnable lack of political will. This is after all business and not personal.
Nonetheless, let’s take a look at the two-fold impact an additional two to five million barrels of domestically produced oil would have on the markets.
First, the additional crude would lower prices and provide an additional cushion between global production and demand. Psychology is a driving force in energy markets. Fear of tightening supplies and diminished spare capacity is a very real concern. So much so that analysts believe the market has priced in a “fear premium” of somewhere between $10 and $25 a barrel. Added domestic production would reduce both the market price and the fear premium substantially.
Second, the dollars spent purchasing that oil would go into the coffers of domestic oil companies, not foreign national oil companies. That money would not be added to the trade deficit. Nor would it provide added weight to a sinking dollar. In fact, it would do the exact opposite and would reinforce the strength and value of the dollar.
Additionally, while Big Oil is an easy political target, it provides jobs in the United States; good paying jobs, at that. It also creates stock value which supports retirement security and pays for the college education of millions of Americans. Additional Saudi production will generate profits for Saudi Aramco, not Exxon Mobil or Chevron. Accordingly, not one retiree’s nest egg will be lined nor one student sent to college in America no matter how much the Saudis open their spigots. This will occur by reaping the economic benefits of allowing domestic oil companies do what they are designed to do best; produce oil.
Finally, as the President noted, there is the issue of refining capacity, No matter how much the Saudis open their spigots or how many additional barrels we could potentially produce domestically, we do not have sufficient domestic refining capacity to handle it.
The last week of April, we imported almost 1.5 million barrels of refined gasoline a day. Yes, we’re not only importing crude oil, we’re also importing refined gasoline. Why? Because we haven’t built a new refinery in the US since Jimmy Carter was president.
While refiners have incrementally added additional capacity in existing facilities, it has not come close to keeping up with increased demand. We are essentially trying to run a growing 21st Century economy with a 30+ year old energy infrastructure system. Government regulation and the NIMBY crowd are in large part to blame for this. While they all want the benefits of oil and gas, they don’t want to be exposed to the often dirty processes involved with extracting and refining it. In the end we must all pay for it one way or another. If you do not pay for it by allowing domestic production and refining, you will pay for it at the pump with the premium prices that a stretched market and imports demand.
Keep that in mind as you’re growling at the pumps as the numbers keeping rolling and rolling and rolling off into the stratosphere, faithful readers. Stay tuned for further updates as the hypocrisy follows the price of oil off into orbit.
