Friday, January 23, 2009

The Saudis Gear Up to Raise Oil Prices

I wonder if anyone remembers the humiliating trips that George W Bush made to Saudi Arabia several times as oil prices rose to their highest ever some months ago? How many trips did he make with his cap in hand begging the Saudis to help reduce oil prices - was it two or three? Whatever it was, it was a terrible humiliation for the Saudis to treat the President of the very country that saved their backsides from Saddam several times in such a shoddy way. And you have the Saudis gear up to do this yet again.

The Gulf News website has a piece here: http://archive.gulfnews.com/articles/09/01/23/10278009.html sternly warning Barack Obama that Saudi - US ties are at risk over the USA's inactivity in the Gaza conflict. This comes a day after Obama appointed a special envoy who is renowned for finally making peace between the British and the Catholic Irish after some seven and a half centuries of fighting. Surely the Saudis don't expect miracles like NBC does two days after Obama got into the White House?

My feeling is that the new Saudi tone has only one implication - low oil prices are hurting the Saudis as they are other oil producing countries. The Saudis are hurting more than others because they produce so much more oil. This whole threat to Obama is the same, essentially, as their behavior with Bush. They want to use Gaza as an excuse to push oil prices up in order to pay fir their new Rolls Royces. Barack Obama would do well to see through the obnoxious Saudi behavior and concentrate even harder on alternative energy to make sure that this country could wave the Saudis a good-bye the next time they try this kind of stunt. I hope to write an article about this on a website that I do write occasionally for and I shall post a link here when I do.

2 comments:

Mohanakrishnan B said...

Mehul
Its not just the low prices of crude.The property bubble in the gulf has burst.The global economic crisis has eroded the value of most properties.Real estate companies have downsized,projects shelved and jobs lost.There are rumours that Dubai is in debt though the UAE government has denied the same.Media companies are facing cuts,shopping malls are witnessing a decrease in the number of foot falls.You can bet that they will be unhappy with falling oil prices.They should be happy with India though because increased consumption will make up by sheer volumes what they lose in pricing.

Mehul Kamdar said...

Mohan,

Whatever the Middle East does as far as construction or indeed anything else you care to look at, is driven by oil. The Arabs manipulated oil prices to a height that made them a lot of money but the subsequet crash because Russia refused to play along and new reserves were found in locations like Cuba and Brazil, killed their little game.

That said, India is no rich nation that can pick any slack up. LIke it or not, India is a severaly underdeveloped country and one where the average upper class family does not get to eat the kind of food that volunteers like me serve the homeless at shelters here even when they go out once a week. Put this in perspective and India can take nothing more than the proverbial drop in the ocean. More than a quarter of the world's oil is consumed by one country alone - the USA - recession or no recession. That said, it is the one drop that the Indians need not use because they would save money if they didn't. The technologies to wean the world off oil for the msot part are available and they would help an otherwise desperately poor country like India do better than it is doing at the moment. Unfortunatley, this is not likely to happen until a cure is found for stupidity and applied to the planners in India, both in Parliament and in that refuge for unburied academic carcasses - the Planning Commission.