No Oil For You! "The Saudi Response Was Not Materially Different From 'Piss Off.'" - Wash Monthly

[hatrack]

EDIT

Stephen J. Hadley, the national security adviser, told reporters, "What they're saying to us is" that "Saudi Arabia does not have customers that are making requests for oil that they are not able to satisfy," The Associated Press reported.

That's a lovely tautology, isn't it? Needless to say, there's always a price at which the demand for Saudi oil is no greater than what they happen to be putting on the market. Today it's $127 per barrel. If they cut production in half and the price went up to $500 per barrel, they still wouldn't be getting any requests they couldn't satisfy.

In other words, the Saudi response was not materially different from "Piss off." At this point, the only really interesting question is whether they're throttling their supply because they want to or because they have to. As time goes on and prices keep going up, I'm inclining more and more toward the latter.

UPDATE: It turns out that the Saudis are increasing their production after all. The increase is only a token 300,000 barrels per day, so it's not clear what's really going on here. A face-saving measure for Bush? Or something else?

EDIT/END

http://www.washingtonmonthly.com/archives/individual/2008_05/013740.php

[skepticscott]

1. It may be

Or it may be their way of trying not to say "We don't have nearly as much extra production capacity as we've been pretending, and we are scared shitless to come right out and admit it."

[tularetom]

2. LOL- No oil for you

The Oil Nazi

[napi21]

3. If I had to guess, I'd say Darth Vader picked up his handy dandy cell phone,

and called the Saudi's and bitched 'em out for making their "adopted family" look bad! No doubt there were threats involved, and the Saudi's caved. Even the Saudi's shudder when the Darth storm thunders!

[MADem]

4. It's a face saving measure for ALL. You could see that coming a mile down the road.

Bush can claim he's a good jawboner; the Saudis can tell their neighbors "SEE? We aren't in their pocket! Just because we rent their military doesn't me we HAVE to do what they say...!"

[bhikkhu]

5. Perhaps, but if prices rise through November we know who loses

(besides all of us, $), its one more nail in the repug coffin. I think all pressure was brought to bear, and they wouldn't budge.

[kristopher]

6. That isn't the full statement.

He also said - correctly - that (slight paraphrase from memory) "upping production would only result in the crude sitting in a ship at harbor for two weeks waiting for refinery capacity."

They have trimmed the excess capacity from the entire system and are operating at a better level of efficiency than in that past.

The problem isn't "peak oil" it is 1) the end of cheap oil resulting from oversupply and 2) a world that is set to tame a renegade US.