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Saudis rebuff Bush's bid for more oil

May 17, 2008|Mark Silva | Chicago Tribune

RIYADH, SAUDI ARABIA — President Bush, for the second time in five months, was rebuffed in his efforts to win a sharp increase in Saudi Arabia's oil production to try to hold down U.S. gasoline prices, which are nearing $4 a gallon.

The Saudis have agreed to a relatively modest boost of 300,000 barrels a day in oil production, announced during meetings Friday between Bush and Saudi King Abdullah. The boost took effect May 10 to meet world demand, according to the Saudi oil minister, and will increase output to 9.45 million barrels a day in June.

The Saudis, the world's largest oil producer, have made clear that they see no great world demand for increased production, Stephen Hadley, the president's national security advisor, said after private meetings between Bush and Abdullah at the king's ranch. And they are not bowing for one customer, albeit the world's biggest consumer.

The talks were conducted in private, but both sides spoke about them afterward.

During the talks, the discrepancy between gas prices in Saudi Arabia and in the U.S. could hardly be more dramatic: Gas fetches about 46 cents a gallon in Riyadh, and a gallon of regular in the U.S. has reached an average of $3.73.

The Bush administration repeatedly has tried to convince the Saudis that the effect of soaring gas prices on the U.S. economy is bad, in the long run, for the profits of the oil producers. They "need to take into account the economic health of their customers who pay these prices," Hadley had said before this visit.

But the president's appeals for stepped-up production -- an appeal he made personally to the king in January, when the price of oil still hovered below $100 a barrel -- conflicts with a firm Saudi practice of matching oil output with demand and maintaining stability in the world's oil market, while heeding quotas set by the Organization of the Petroleum Exporting Countries.

Although stepped-up production could alleviate pressure on rising prices, analysts say, the Saudis, who produce 10% of the world's oil, have no incentive to aid the U.S. alone.

"The reality is, the market isn't being driven by us," said Anthony Cordesman, a senior fellow at the Center for Strategic and International Studies. "It's being driven by China, by India, by rising Asian demand, which guarantees a market into the long term."

The Bush administration is honoring 75 years of formal relations with the Saudis -- cemented with an agreement Friday to cooperate on security, nuclear energy and nonproliferation of nuclear weapons.

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