Bush And Saudi Ruler Walk Hand-In-Hand
Bush and Saudi ruler walk hand-in-hand
President clearly worried about the political impact of sky-high gasoline prices
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By ALAN FREEMAN
Tuesday, April 26, 2005 Updated at 4:34 AM EST
From Tuesday's Globe and Mail
Washington — It's not often that U.S. President George W. Bush is seen walking hand-in-hand with anyone but his wife Laura. But yesterday, he readily took Crown Prince Abdullah by the hand as the Saudi leader arrived at the President's Texas ranch.
The hand clasp with the oil kingdom's 81-year-old de facto ruler had two objectives: a break from recent record-high world oil prices, and a message of U.S. support for the Saudi royal family as it faces a growing internal terrorist threat.
With the summer driving season about to begin, Mr. Bush is clearly worried about the political impact of sky-high gasoline prices in a country in love with its cars and sport-utility vehicles.
He said before the meeting that the prince understands the value of keeping oil prices reasonable.
"A high oil price will damage markets, and he knows that," the President said.
The prince told Mr. Bush he would love to help, but said his nation was already close to pumping all the oil it could. The world's big energy consumers will have to do their share if they want oil prices to decline in the long term, he said.
Adel al-Jubeir, a spokesman for Prince Abdullah, said that at more than $50 (U.S.) a barrel, oil prices are too high. But Saudi Arabia's room to manoeuvre is limited because there is a world shortage of refining capacity, and any extra crude the Saudis could pump would not be high-quality.
"Saudi Arabia believes that the price of oil should be at reasonable levels that do not harm consumers, nor harm producers," Mr. Al-Jubeir said. "We believe that high oil prices in the long term hurt consumers by slowing economic growth."
He said that the kingdom, the world's largest oil exporter, is producing 9.5 million barrels a day and could pump another 1.3 million to 1.4 million barrels.
But much of the spare oil is high-sulphur crude that not all refineries can handle, he said, adding that there is not enough refining and shipping capacity in the world to turn oil into gasoline and other products.
"It will not make a difference if Saudi Arabia ships an extra one million or two million barrels of crude to the United States," he said. "If you cannot refine it, it will not turn into gasoline and that will not turn into lower prices."
Looking to the future, White House National Security Adviser Stephen Hadley praised the Saudis for their "very ambitious" $50-billion plan to expand output to 12.5 million barrels a day by the end of this decade and eventually to 15 million barrels a day.
Oil markets responded with optimism to the Saudi promise of additional crude supply as U.S. light crude fell 82 cents yesterday to close at $54.57 a barrel.
William Edwards, a Texas-based oil analyst, believes the Saudis have long since lost the ability to move oil prices and that the current price rise is not a result of a shortage of crude. "There's a shortage of refining capacity and that keeps upward pressure on prices," he said in an interview.
But he added that the Saudis, who are reaping a huge windfall from the surging cost of oil, "aren't particularly upset about the high prices."
Prince Abdullah has been de facto leader of Saudi Arabia since his half-brother King Fahd was incapacitated by a stroke almost a decade ago.
The symbolism of the meeting, also attended by Vice-President Dick Cheney and Secretary of State Condoleezza Rice, was unmistakable.
U.S.-Saudi relations cooled markedly after it emerged that most of the 19 hijackers who carried out the attacks of Sept. 11, 2001, were Saudi citizens. The U.S. invasion of Iraq in 2003 seemed to indicate a growing impatience with autocratic regimes in the region.
But the United States and Saudi Arabia remain closely linked by military and strategic economic interests, and Washington still looks to the Saudis as interest brokers within the Organization of Petroleum Exporting Countries.
For their part, wealthy Saudis who were accused of encouraging and even funding al-Qaeda's terrorist activities now recognize it as a threat after a spate of internal attacks.
The "United States respects Saudi Arabia as the birthplace of Islam, one of the world's great religions, and as the symbolic centre of the Islamic faith," Mr. Bush said yesterday.
But "it does not seek to impose its own style of government on the government and people of Saudi Arabia," he added, suggesting that his quest to spread democracy in the Middle East would not reach the desert kingdom soon.
His statement praised Saudi Arabia's recent municipal elections, the first ever in the kingdom, which excluded Saudi women from voting. The United States "looks for even wider participation in accordance with the kingdom's reform program," the message said.
About half the daily U.S. consumption of 20 million barrels of oil is imported. At 1.5 million barrels a day, Saudi Arabia has been the top supplier of crude in recent months.
But that is just a shade above the amount imported from Canada and Mexico. And if finished products like gasoline are included, Canada jumps to the top of the list.
