Sweet and Sour : US senator pumps Saudis for more

When I was growing up, we used to watch a funny television show featuring a Syrian comedian. One of the punch lines of one of its characters was: "If you want to know what is happening in Brazil, you must understand what is happening in Africa." Now this is a long time ago and I may have got the countries and continents wrong but you get the idea.

Now suppose you were an American motorist and you wanted to know why you were paying more than $2 per gallon for your petrol, where would you look for comprehension?

Why? the Middle East of course, suggests Democrat senator Charles Schumer. For if you want to find out what is happening on the US motorway, then go look in Ghawar. (Just an aside here. Ghawar is actually the biggest oil field on earth and is located in Saudi Arabia. It also happens to be the name of this comedian who starred in this show I a talking about.)

Schumer, and a few like-minded senators, think Saudi Arabia is to blame for the high cost of filling up this summer because they say it cut oil exports to the US in the first three weeks of August just when it was needed the most.

Schumer and 31 other senators have urged President George W. Bush to "stand up to the Saudis" and release oil from strategic reserves to bring down prices.

Intervention

But the truth is that no such intervention was necessary. Once the American driver locked up his vehicle after the formal end of the summer driving season following the Labour Day weekend, oil prices fell sharply of their own volition.

The Saudis had nothing to do with it. In fact, what the numbers did not say was that even if Saudi Arabian crude oil exports to the US fell in August, they did so from record high levels when the Saudis were using their spare capacity to replace missing oil from Iraq, Venezuela and Nigeria.

True, oil prices have been higher than even the Saudi Arabians want but there is no evidence of a deliberate effort by the world's biggest oil exporter to deprive the Americans of oil. The Saudis don't like suggestions that they are the world's "swing" producer yet they have taken on the role unofficially, quietly opening the taps when they felt the market needed more barrels.

Since it takes around 40 days for a tanker to make its way from Saudi Arabia to the US Gulf Coast, it would have taken a lot of premeditation on the part of the Saudis to have timed a drop in exports to the US to coincide with near record high gasoline prices seen this summer. Nor should we forget the impact the US-led war against Iraq has had on oil market psychology and prices.

That Iraq war premium is still factored into the high prices we are paying for our energy even with the end of the war.

The truth is that a US-dominated Iraq was supposed to become that secure, reliable source of energy to replace Saudi Arabia, the erstwhile ally now looked upon with increasing suspicion by the hawks in Washington. That day has yet to come, so in the meantime, "Bash the Saudis" has become a theme in some US political circles.

Advantage

Remember a small independent lobby group has already advised Americans to dump their small utility vehicles (SUVs), equating drivers of SUVs to supporters of terrorism because of the amount of oil that America imports from the Middle East.

The Russians have used this American phobia to their advantage. The same statistical data which pointed to the fall in Saudi exports also showed that Russian oil exports to the US are at their highest volumes ever recorded.

The writer is Middle East editor of energy information and pricing service, Platts, a division of McGraw-Hill Companies