In case you missed it, Saudi Arabia Rebuffed Bush On Oil Request last week.
Saudi Arabia will raise oil production only when the market justifies it, the kingdom's oil minister said Tuesday, in response to President Bush's request that OPEC nations increase output to reduce world oil prices.Saudis Leery Of Bush
"Our interest is to keep oil supplies matching demand with minimum volatility in the oil market," Oil Minister Ali Naimi told reporters. "We will raise production when the market justifies it. This is our policy."
Earlier Tuesday in Riyadh, Bush warned that soaring oil prices could slow the U.S. economy. "High energy prices can damage consuming economies," the president told a small group of reporters traveling before meeting late Tuesday with Saudi King Abdullah, whose country holds the world's largest supply of oil.
Bush said U.S. consumers are feeling the pain of rising oil prices, which topped $100 a barrel this month.
The Saudi public is "leery of Bush"
The AP notes that despite Bush’s “close ties to the kingdom’s ruling family,” he is viewed with “deep unpopularity among ordinary Saudis.” A recent poll found that only 12 percent of Saudis view Bush positively — “lower than Iran’s president or even al-Qaida chief Osama bin Laden.”US Leery Of Bush
Click on chart for sharper image. Chart from PollingReport.Com.
Bush Approval Ratings Are A Gas
Click on chart for sharper image.
The red line is inverse gasoline prices.
The above chart with much thanks to Professor Pollkatz.
Mission Accomplished
Here is an interesting comment in the Salt Lake Tribune about Bush's Tour.
"Bush could have made a real diplomatic and political overture to Iran to try to bring some sense to the ongoing conflict in the region. Instead, the major accomplishment of his trip seems to be a $123 million arms deal with the country that gave birth to, educated and financed 15 of the 19 people who attacked us on 9/11."
Presidential Candidates Energy Plans Lack Substance
Rising oil prices on the campaign trail
Democratic proposals are ambitious...and vagueRon Paul's Plan
Senator Barack Obama, D-Ill., speaking about the energy policies he would support as president, said, "I will set big goals for this country as president -- some so large that the technology to reach them does not yet exist."
[Mish Comment: Wow - Is he going to invent a perpetual motion device or is this merely a poor Kennedy imitation? At least Kennedy had a goal people could understand, to get to the moon.]
Senator Clinton said during the New Hampshire debate in December that the next president needs to make sure that the next energy policy is good for "our security and good for the fight against global warming." Clinton would try to collect money from oil companies to pay for investments in new alternative energy sources and increase car fuel efficiency.
[Mish Comment: This amounts to taxing the producers and subsidizing the dreamers. Perhaps she wants to fund Obama's mission to build technology that does not exist yet.]
Former Senator John Edwards has focused his position on energy policy on corporate profits and consistently refers to energy companies as entrenched lobbying interests that he would take on if elected president. "Today's report that the price of oil has reached $100 a barrel is just another example of how corporate greed is squeezing the middle class... It's time for us to rise up and take on the corporate greed."
[Mish Comment: Why is it that profits are fine everywhere but energy? Why not tax greedy politicians?]
Republicans also make big promises...with little specifics
Former Massachusetts Governor Mitt Romney says he will wean America off oil by using more biofuels and nuclear power, though biofuels are a small part of the domestic fuel supply and a nuclear power plant hasn't been built in decades.
Former Arkansas Governor Mike Huckabee says he will develop a plan to end America's energy addition in eight years through greater reliance on nuclear, wind, solar, hydrogen, clean coal, biodiesel, and biomass. At the same time, Huckabee says the "free market will sort out what makes the most sense economically," leaving voters to figure out how the president and the free market will work out the particulars.
Former New York City Mayor Rudy Giuliani wants a little bit more of everything in the energy basket -- a little more production of biofuels, coal, nuclear power, solar power, wind power, hydro-power and hybrid vehicles. The mayor supports government help for the businesses developing new technologies but adds he "doesn't necessarily mean larger subsidies."
[My Comment: So we are going to offer government help that does cost anything. Good idea. Paradoxically, the way to accomplish that is to get the hell out of the way by offering no help.]
Former Senator Fred Thompson thinks the U.S. can become "more energy independent" but says politicians need to level with the public. "We're not going to be energy independent in a few years," he said during the Jan. 6 Republican debate.
[My Comment: Well that proposal sure has no substance, but at least it's honest.]
The only candidate who had an Energy Plan worth hearting about was Ron Paul. Of course he was left out of the article.
Here is the cornerstone of his policy: "Any source that truly is cheaper and cleaner, yet still reliable, will not need government help to develop or sell. Clean, safe, and reliable energy is far too important to leave to the political whims of Washington bureaucrats."
My Proposal To Reduce Energy Prices
- Get out of Iraq.
- Stop wasting stop wasting energy transporting troops all over the world.
- Stop wasting energy flying needless missions all over the word.
- Stop this insane saber rattling with Iran. Instead, sit down at the table and discuss things with them.
- Legalize hemp for biofuel and fiber production.
- Eliminate subsidies on grains.
- Eliminate subsidies for ethanol production.
- Eliminate tariffs on ethanol imports.
- Stop flooding the world with dollars.
- Let the free market solve the problem no matter what fashion it takes or how long it takes.
Weekly Crude Prices
click on chart for sharper image
What Bush could not accomplish on his tour a recession likely will.
Oil prices are set at the margin and with the US in a recession, the UK and EU heading there and with China attempting to arrest severe inflation, I doubt oil prices stay up here for long.
The crude chart looks double topped and overextended. A pullback to the 50EMA near 80 seems extremely likely. However, I think most are underestimating how severe in both magnitude and duration this recession will be. If production stays constant, I expect a pullback all the way to the 200EMA near 65.
Near term, a recession will take precedence over longer term factors like peak oil. Again, this assumes production remains fairly stable and Bush does not do something insane like attack Iran. If the world economy slows enough, it would not surprise me to see OPEC scale back production, not increase it.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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