Saudis Reject Bush's Call to Increase Oil Output
By Michael Abramowitz
Washington Post Staff Writer
Friday, May 16, 2008; 12:25 PM
RIYADH, May 16 -- Saudi Arabia
Friday rejected the idea of increasing oil production to help ease soaring gasoline prices, telling President Bush that the kingdom already is meeting its customers' demand for crude.
The apparent rebuff came as Bush appealed to Saudi King Abdullah to use his country's vast oil reserves -- the world's largest -- to put more oil on the market and reduce the upward pressure on prices. It was the second time this year that Bush has made such a personal appeal to the Saudi monarch.
"What they're saying to us is . . . Saudi Arabia does not have customers that are making requests for oil that they are not able to satisfy," said Stephen J. Hadley, Bush's national security adviser. He told reporters that the Saudis indicated they are willing to put oil on the market in amounts sufficient to meet their customers' demands.
Even if they increase production, Hadley quoted the Saudis as telling Bush, that would not dramatically reduce gasoline prices in the United States.
The officials told Bush they are doing "everything they can do" at present and are investing in ways to increase oil production in the future, Hadley said.
Bush met with Abdullah in Saudi Arabia in January and pushed for more oil production then but was turned down.
The latest rebuff came on a day when oil prices surged by more than $3, soaring to a record of nearly $128 a barrel as gas prices also rose. The U.S. national average for regular gasoline now stands at $3.78 a gallon. Crude oil prices on the New York Mercantile Exchange subsequently eased somewhat Friday to nearly $127 a barrel -- about 30 percent higher than they were in January.
Bush flew to the Saudi capital from Jerusalem Friday, turning his attention not only to the rising price of oil but to the looming threat from Iran
, two of the big issues on the agenda for his meeting with King Abdullah.
U.S. officials and other experts said the king probably was most interested in discussing Iran. The leaders of this Sunni-dominated kingdom are deeply concerned about what they see as the aggressive actions of Shiite Iran in Lebanon
and elsewhere in the Middle East, and they have been pushing the administration to be more assertive in confronting Tehran.
But with rising energy costs a drain on the world economy, domestic U.S. politics made oil perhaps the key subject of discussion.
The Saudis have argued that they are doing all they can reasonably do without impinging on the spare capacity they say they must keep in case of emergency.
Even before Bush arrived, the White House announced that the two nations had negotiated four "critical agreements to strengthen the protection of energy resources, enhance peaceful nuclear cooperation, broaden the fight against global terrorism and bolster nonproliferation."
The White House said Saudi Arabia will join the 70-nation Global Initiative to Combat Nuclear Terrorism and the 85-nation Proliferation Security Initiative., The United States will work with the Saudis to help protect the kingdom's vast energy resources and infrastructure and to develop civilian nuclear power to be used in medicine, industry and power generation.
Briefing reporters before the trip, Hadley said Bush has made clear to the Saudis and other oil suppliers that "as they consider their pricing policies and as they consider their production targets, they need to take into account the economic health of the global community; need to take into account the economic health of their customers who pay these prices."
But Hadley also sought to dampen expectations. "Capacity is limited in the international market. It just is," he said. "Capacity is limited in the Middle East. There are limits to how much that production can be ramped up without enormous investments of dollars and enormous investments of time."
Administration officials, including Vice President Cheney, have lauded the Saudis for making billions of dollars in investments to expand their capacity in recent years The Saudis now pump about 9.2 million barrels of oil a day, and they have an overall capacity to pump about 11 million daily.
"The Saudis are doing all you can reasonably expect," said J. Robinson West, chairman of PFC Energy in Washington, adding that the kingdom sees an inconsistency between the United States demanding more production and not opening itself to more drilling.
But Youssef M. Ibrahim, a freelance writer and consultant who specializes in oil, said in an interview that the Saudis should be able to do more but don't want to. "They have plenty of money -- there is no reason for them to increase production to get new income," he said. "They don't feel any compelling need to help out. They see Bush as leaving. It's his last nine months."