There is one primary conclusion we can draw from oil at $100/barrel at a time when the world's 2 largest economies are showing signs of severe weakening, with much worse clearly on the horizon. That conclusion is: Despite all the jaberwocky about the supposedly multifarious factors which have generated the quadrupling of oil prices over the past half decade, and which supposedly account for record oil prices today, even as the global economy teeters on the brink of global recession, one thing is clear. If Saudi Arabia had an oil policy designed to prolong the duration of heavy oil consumption at an optimal (for them) price, while still squeezing ample wealth from the consuming nations, it would have restricted the rise in oil prices to the merely outrageous, and not allowed it to reach the level of piracy. Short-term, unrestrained wealth extraction from the West via price maximization, rather than a slower, lengthier, longer-term and immediately less damaging (to the consumer nations' economies)extortion via price OPTIMIZATION constitutes the essence of Saudi oil policy. For all the verbiage about the rise of China and India, the steep ascent in oil consumption by the wannabe oil guzzlers of eastern and southern Asia, the upward spiral of oil consumption by the Middle East oil producers themselves, the numerous geopolitical threats to oil supplies, the negative impact of "resource nationalism" on oil exploration, investment, and production, the alleged role of speculation driving oil prices through the roof, the energy hoggery of the developed nations, etc etc, the bottom line remains that it is the Saudis, and the Saudis alone, with their surfeit of immediately accessible extra oil production who have -- and have all along HAD it within their power via production increases to keep oil prices within the tolerable, if not the rational, range. The extra, substantial measure of damage to the American and European economies which Saudi greed and short-sightedness are wreaking will, we believe, come back to haunt them. What goes around comes around, we think. The American voter/consumer/homeowner/taxpayer is closer than ever to reaching the point where he/she says ENOUGH to the seemingly endless expenditure of blood and treasure in Middle Eastern lands so that the Saudis may enjoy mind-boggling luxury, ease, and security while they bleed us white. We do not expect altruism from our dear Saudi friends, but we would have hoped for a policy based upon enlightened self-interest, rather than a policy of gouging a l'outrance. Seems we expected far too much. |
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