The President & the Prince
Bush, Abdullah talk oil prices
CRAWFORD, Texas -- President Bush met with Saudi Crown Prince Abdullah at his Crawford, Texas, ranch on Monday to praise the kingdom's efforts to fight terrorism and seek its help in countering the economic threat posed by record oil prices, reported Reuters.
The White House is facing growing consumer dissatisfaction over rising oil prices, with retail gasoline hitting a record nationwide average of $2.28 a gallon this month. The president is expected to press for more oil production from Saudi Arabia, the biggest producer within the Organization of [image-nocss] Petroleum Exporting Countries (OPEC).
Representative Edward Markey (D-Mass.) blamed the Bush administration for a "failed energy policy" and called for a plan that focused on renewable technologies, energy efficiency and conservation rather than an expansion of oil and gas drilling in the United States.
The House of Representatives has approved an $8 billion energy bill with incentives to increase domestic production of crude oil, natural gas, coal, nuclear and other energy sources. It would allow oil drilling in Alaska's Arctic National Wildlife Refuge (ANWR). The Senate was expected to complete its version of the bill in May.
Crude futures were flat Monday as Bush and Abdullah met, added an Associated Press report.
Light, sweet crude for June delivery was up by a penny at $55.40 a barrel by midday on the New York Mercantile Exchange (NYMEX). Heating oil futures rose by half a cent to $1.55 a gallon, while unleaded gasoline climbed 2.47 cents to $1.677 a gallon. In London, Brent crude was up 42 cents at $55.39 on the International Petroleum Exchange.
Bush has promised to press Abdullah during Monday's meeting in Texas to do more to help ease global oil prices. But he has acknowledged there may be little the Saudis can do in the short term.
As the world's top oil exporter and leading member of OPEC, Saudi Arabia now pumps about 9.5 million barrels daily. Saudi Oil Minister Ali Naimi promised last week to increase production capacity from the current limit of 11 million barrels a day to 12.5 million barrels by 2009 and possibly 15 million barrels after that.
Victor Shum, oil analyst at Texas-headquartered Purvin & Gertz in Singapore, said the meeting will likely ease prices as "the Saudis are sending signals that they are doing their part to increase supply."
But other analysts suggested reassuring words from the Saudi-U.S. meeting may not be enough at a time of bullish market fundamentals. In Vienna, PVM energy consultants linked the recent rise in prices to a "series of refinery glitches [and] quite bullish U.S. stock data," combining to "paint a picture of downstream tightness and high volatility." In a newsletter, the company said that last week's shootout with Saudi militants also added to market jitters.
SG Securities analyst Deborah White in Paris said the perception that "everyone is saying we are doing all we can"producers, as well as oil companiessends a message that no one is willing to embark on new initiatives to bring prices down.
Crude prices hit an intraday high of $58.28 at the beginning of April before falling back to about $50 per barrel, and then rising again.
Traders are concerned that falling gasoline inventories and reported refinery outages in the United States could drive prices higher as the summer driving season in the Northern Hemisphere approaches.
The U.S. government weekly report showed gasoline inventories declining by 1.5 million barrels to 211.6 million barrels, or 5% above year-ago levels.
But Shum was confident that gasoline supplies will be enough to meet demand. "Gasoline inventories in the U.S. are higher than last year's levels, so traders shouldn't worry too much about it," he said.
Meanwhile, retail gasoline prices lost 4-1/2 cents in the past two weeks and might not get it back anytime soon, according to the most recent Lundberg Survey of about 7,000 U.S. gas stations. Self-serve regular is now $2.2437 nationally, down 4.51 cents from April 8.
During the period, both retailers and refiners gave up some margin, Trilby Lundberg, spokesperson for the Camarillo, Calif.-based company, said. Demand, while apparently still growing, is being dampened to some still-unknown degree by higher prices and this works to augment supply. Unless crude oil prices jump or a gasoline supply shortfall develops, the near term likelihood is for relatively stable, or slightly falling, retail gasoline prices.