First it went up—an expected reaction to the expanding anti-American riots taking place in the Middle East and Israel’s “hawkish statements.” Then, almost inexplicably, it went down—while the reasons for the increase remained intact.
Industry experts have come up with a variety of explanations as to why the price of crude oil suddenly dropped from “a four month high of $117.95”—with American gasoline prices at “the highest ever level for this time of the year”—to “their lowest in six weeks.” A wide range of reasons are offered: expiring futures contracts; doubts about the pace of global economic recovery; the restart of production, shipment, and refining following hurricane Isaac; a bigger than expected increase in US crude oil stocks; a decrease in the spread between WTI and Brent; improved vehicle-mileage standards; and even the fat fingers of a trader.
One week ago, when oil prices reached their current peak, Iran’s oil minister, Rostam Qasemi, said that crude oil ought to be at least $150 a barrel. The reason? “Current oil prices were not high enough to threaten the world economy.”
Make no mistake. The Arab world is well aware of the potential choke-hold the countries have on the “world economy,” and they like the control position. They enjoy it when American presidents grovel, and even bow. They know we have to come to them and press for more production every time the geopolitics—much of which they control—heats up the price of oil. Addressing the “highest ever,” “for this time of year” gasoline prices of $3.87 a gallon, the Financial Times states: “The White House is watching.” There are rumblings about a release from the Strategic Petroleum Reserve.
A current AP article heralds: “Gas prices, not jobs stats, are key numbers for voters.” The subtitle hammers the point: “Gas prices and grocery bills are more likely to sway voters than the monthly jobs report, economists and pollsters say. Gas prices are nearing $4 per gallon and could be key in deciding the presidential race.”
Four-dollar-a-gallon is widely believed to be the current tipping point at which the public goes berserk and beseeches the president to do something—though as CNBC anchor Brian Sullivan chirps “for the majority of the country, $4 gas isn’t going to doom our economy... it looks like $5 is the new $4 when it comes to gas prices and the economy.” While President Obama obviously can do little to calm the radicals rioting in the streets, burning our flag, and shouting anti-American epitaphs, with November 6 in his sight, Obama can ask OPEC for more oil—and more oil supply lowers the price of gasoline and increases his re-election chances. In the tight race, he needs every possible advantage.
Iran’s representative on the board of governors of the Organization of the Petroleum Exporting Countries (OPEC), Mohammad Ali Khatibi, gloats: “The United States is trying to artificially bring down prices by pressing oil producing countries to raise output.”
Enter Saudi Arabia—the kind and caring Saudis. Yes, the very same Saudi Arabia ruled by King Abdulla with whom President Bush held hands and to whom President Obama scraped and bowed. There are apparently no news reports on a White House emissary visiting King Abdulla to press for increased output, yet, as the Financial Times reports: Saudi Arabia “has been offering extra oil to its customers.” (Italics added)
Maybe Michelle Malkin was wrong when she said about President Bush: “The hand-holding has gotten us nowhere—and in fact, has made us less secure.” Not likely.
The same Financial Times article quotes “a Gulf-based oil official,” who said that last week’s high oil price was “too high” and that the kingdom “would like to see oil prices back to $100 a barrel.”
So, days apart from each other, we have neighboring OPEC countries saying that prices aren’t “high enough” and that they are “too high.” Which is your truth depends on your goal. Iran’s comment references threatening the world economy—to them it isn’t “high enough.” Saudi Arabia is less ideological; more self-preservationist—to them it is “too high.” But, too high for what?
America has long been known as the Saudi Arabia of coal. Now, we are called the Saudi Arabia of natural gas—even the Saudi Arabia of wind. Recent US discoveries are reported as containing four to six times the proven oil reserves of Saudi Arabia. We could well be the Saudi Arabia of oil—which would mean we don’t need them, and we can supply our own needs and much of the world’s. Without US dollars, how would they drive their Ferraris, adorn themselves with designer goods, and send their children to private American schools?
Question: Saudi Arabia thinks oil prices are “too high” for what?
Answer: Too high for President Obama to get re-elected.
Saudi Arabia is betting on Obama; they have a vested interest in his victory. They know that if Obama gets a second term, America’s riches in natural resources will stay in the ground, and we’ll remain dependent on them. Therefore, Saudi Arabia has “pledged to keep output high to meet demand” “through the end of the year”—might we say, through the election?
Upon hearing my premise, former Texas Railroad Commissioner Elizabeth Ames Jones—with whom I shared the platform at a speaking engagement Friday night, agreed, and added: “Obama doesn’t need to release oil from the Strategic Petroleum Reserve, he’s got Saudi Arabia doing it for him.”
Mitt Romney, on the other hand, has promised to build the Keystone pipeline and develop domestic resources—both of which will bring more North American oil to market, increase supplies, lower prices, and loosen the choke-hold OPEC maintains on the world economy.
If Mitt Romney wins, OPEC loses.
If the US average gasoline price stays above $4 a gallon, OPEC knows that Obama’s chances of re-election are diminished, but if they can keep prices low by pumping more “through the end of the year,” it helps Obama’s re-election efforts.
If Obama wins, OPEC wins. If OPEC wins, America loses. There is no win/win.
No wonder OPEC is betting on Obama.