Why Petro-Envy Is Stupid
IF YOU’RE not a regular reader of Arianna Huffington’s blog The Huffington Post, you will have missed this gem of what I like to call “petro-envy”
The Huffington Post has a long list of politicians, experts and media commentators who blog on the site. One of their so-called oil experts, Raymond J. Learsy, likes to launch regular attacks on Saudi Arabia for being excessively greedy in how it prices its oil. What Learsy seems to conveniently forget is that oil, just like any other commodity, is subject to the forces of supply-and-demand. Sometimes the price goes up, sometimes it goes down. Sure, the kingdom can manipulate the price to a small extent by how much oil it decides to pump per day, and by what the Oil Minister Ali Al-Naimi says. But the kingdom is also constrained by the fact that it has already reached its capacity output, leaving it little wriggle room.
What Learsy does not understand is that the kingdom has endured drought years where the price of a barrel of oil sank to as low as $18 a barrel in the late 1990s, forcing the Saudi government to borrow billions of dollars to meet its budgetary requirements. This past year, with oil hitting $70 a barrel, the kingdom has reaped a rich bounty indeed, that cannot be denied.
In his latest blog entry, entitled “Saudi Arabia’s Oil? Sovereign Resposibility Trumps Sovereign Rights!” Learsy contends that Saudi Arabia is basically unfit to control its oil because it is charging too much for it, and that the US should invade the Eastern Province and put the oilfields under international control.
“The oil under Saudi Arabia’s suzerainty is being made available to the world at large virtually without consideration as to need nor equity. Not only that, but Saudi Arabia breached their fiduciary trust and has delivered this vast and important resource into the grip of the larcenous OPEC cartel in order to extort the maximum possible lucre irrespective of the enormous economic distortion it creates, wresting the means to build Palaces and Yachts from the backs of the miserably poor in the Asian subcontinent, Africa, and throughout the world. Riches attained by adding no real value other than the serendipity of finding themselves with ‘Sovereign Rights’ over one of the world’s key economic engines.”
This in my mind is ludicrous! Should Russia invade California because it feels Apple Inc. is charging too much for iPods? They could do so and blame the poor leadership of President George W. Bush for having done so, citing the need for the world to have cheaply priced iPods.
As many commentators on Learsy’s blog have rightly pointed out, the US and Americans have to get over their complex of believing that it is their God-given right to have cheap oil. The sooner they do so, the sooner they and the neoconservatives can give up their dream of controlling Saudi oilfields.