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High Gas Prices Unmoved by Bush Meeting with Saudi Leader

CRAWFORD, Texas, April 26, 2005 (ENS) - President George W. Bush hosted Saudi Arabia’s Crown Prince Abdullah at his Crawford ranch Monday and came away from the meeting without a short-term solution to soaring U.S. gasoline prices. Instead, a longer-term plan to boost oil production capacity was presented by the Saudi team at a series of meetings.

In a joint statement the two leaders said, "Both nations pledge to continue their cooperation so that the oil supply from Saudi Arabia will be available and secure. The United States appreciates Saudi Arabia's strong commitment to accelerating investment and expanding its production capacity to help provide stability and adequately supply the market."

National Security Advisor (NSA) Stephen Hadley said Saudi leaders brought a “very ambitious plan” for investment in expanding oil-production capacity from their current limit of 11 million barrels per day. Saudi Arabia holds the largest oil reserve in the world.

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President George W. Bush and Saudi Arabia’s Crown Prince Abdullah clasp hands as they stroll the grounds of the presidential ranch. (Photo by David Bohrer courtesy The White House)
“They're talking about a plan that would allow them to go to about 12.5 million barrels a day by the end of the decade; and plans in the next decade to increase that over time to about 15 million barrels a day, in order to help stabilize the market and ensure an adequate supply at a reasonable price,” Hadley said at a media briefing Monday.

"What really came," Hadley said, "was a plan for increasing production through substantial investment, to the tune of about $50 billion over time."

The U.S.-Saudi talks come at a time when the average gasoline price across the United States is $2.28 a gallon, up $.42 from one year ago. President Bush's approval ratings are at an all time low, driven down, in part, by the rising prices at the gas pump.

Secretary of State Condoleezza Rice told reporters that the two sides had a “very productive dialogue” concerning the global oil supply and its relations to the expanding international economy, and agreed on the need for a fair price to allow oil investment to continue, as well as the need for a reliable supply of oil over the long term to help the international economy continue to grow.

“What they came to talk about was how they might increase their capacity through investment so that we have not just short-term answers, but longer-term answers as well,” she said.

Hadley said, "The Saudis really came with a plan, which was briefed in some detail to the Vice President [Dick Cheney] yesterday. So they came with a plan of what they intended to do, went through it in some detail. Their oil minister was here. He called it a "very good plan because it addresses the underlying issue you have when you talk about price, which is an issue of availability of oil and availability of capacity."

At their briefing, the Saudis said that even though they can increase production, the infrastructure for shipping at certain refineries is at capacity. Crown Prince Abdullah's Foreign Affairs Advisor Adel Al-Jubeir said, "it doesn't matter if we send another one or two million barrels a day over here, we can't refine it."

Hadley said the Saudis are looking at what they can do on their side with in increase refinery capacity, and they had some questions about refinery capability on the U.S. side as well. "I think there is more discussion that needs to be done on that issue. But it was addressed; more attention needs to be paid to it," he said.

The meeting at the President's Crawford ranch was held on the same day that one of Bush's top energy advisers told a conference in Edinburgh, Scotland that the time of "peak oil," when global oil production rises to its highest point before declining irreversibly, is rapidly approaching.

Simmons

Matthew Simmons heads Simmons & Company International, an independent investment bank specializing in the energy industry. (Photo courtesy OTC)
Matthew Simmons, chairman of the Wall Street energy investment firm, Simmons & Company International, called for an independent assessment of global oil reserves. He warned that Middle Eastern countries may have less than they have officially stated and that oil prices could double to more than $100 a barrel within three years, triggering economic collapse.

Several energy analysts at the conference pointed to mounting evidence that suggests the era of cheap, abundant oil is coming to an end. Some predict that global production could reach its all-time peak before the end of this decade, or soon after.

Against this background, Rice and Hadley said that the United States and Saudi Arabia have established a joint committee, to be chaired by Rice and Saudi Foreign Minister Prince Saud Al Faisal to discuss a range of strategic issues important to both sides, "in addition to the normal diplomacy,” Hadley said.

Bush and Abdullah also discussed Israeli-Palestinian peace efforts, including Israel’s planned disengagement from Gaza and some Israeli settlements in the West Bank.

In their joint statement, the two leaders said, "the United States and the Kingdom of Saudi Arabia desire a just, negotiated settlement wherein two democratic states, Israel and Palestine, live side by side in peace and security."

Secretary Rice said she discussed with Crown Prince Abdullah the need for everyone to support the Palestinians as the disengagement moves forward, “including financially.”

The two leaders discussed the entry of Saudi Arabia to the World Trade Organization. "We will work together as partners to complete our negotiations and with other WTO members in Geneva with the aim of welcoming Saudi Arabia into the WTO before the end of 2005," the President Bush and Crown Prince Abdullah said in their joint statement.

The joint statement reiterated the leaders' determination to fight terrorism, to prevent the proliferation of nuclear weapons, to "increase our military exchange programs so that more Saudi officers visit the United States for military education and training," and to facilitate student exchange.



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