Back in January, on his trip to the Middle East, the President all but begged the Saudi royals — the New York Times referred to his requests as “entreaties” — to put more oil on the global market and so lower prices at the pump in the U.S., essentially saving his “legacy.” In April 2005, in his previous meeting with then-Crown Prince, now Saudi King Abdullah, Bush was also fretting about oil prices. A barrel of crude was then pegged at $54. This time, the President who, in his seven years in office, has told the leaders of more nations more times what they “must” do, approached the Saudi king with the sort of diffidence (by his own description) that a needy vassal might employ with his liege lord.
No surprise there. By this Tuesday, the price of oil had crested above $109 a barrel, more than doubling since 2005, and a gallon of regular was already averaging $3.22 at U.S. gas pumps with the latest price leaps yet to register. Estimates for oil at $130 a barrel this year and $150 in 2009 are now common. Something else had changed as well — the mood of the Saudis and the leaders of many other petro-powers. Last week, OPEC officially rejected the President’s entreaty to immediately increase the oil supply without even a polite nod, instead suggesting that the Bush administration was mishandling the American economy. Ali al-Naimi, the Saudi oil minister, couldn’t have been blunter. There was no need, he insisted, to increase global supplies by “even one barrel of oil.”
In fact, the global resource landscape is changing fast and the “sole superpower” on the planet is looking ever more forlorn. Over the years, no one has caught this changing landscape better than Michael Klare. Once again just ahead of the curve, he has produced a new book (to be published in mid-April), Rising Powers, Shrinking Planet: The New Geopolitics of Energy, that lays out the resource and power map of the planet, which is morphing in startling ways. Over the coming months, Klare will be producing a series of articles for Tomdispatch.com based on the findings in his book. This is the first of them. His are words worth heeding. Tom
The Bad News at the Pump
By Michael T. Klare
On Monday March 3, the price of crude oil reached $103.95 per barrel on the New York Mercantile Exchange, surpassing the record set nearly 30 years ago during another moment of chaos in the Middle East. Will that new mark prove distinctive in the annals of world history or will it be forgotten as energy prices drop, just as they did following their April 1980 peak?
When oil costs are plotted over time, the 1980 oil crisis — prompted by Ayatollah Khomeini’s Iranian revolution — stands out as a sharp spike on that price curve. Both before and after that moment, however, oil supplies proved largely sufficient to meet rising global demand, in part because the Saudis and other major producers were capable of compensating for declining Iranian production. They simply increased their output substantially, dumping a surplus of oil onto the global market. Aided by the development of new fields in Alaska and the North Sea, prices dropped precipitously and stayed low through the 1990s (except for a brief spike following the Iraqi invasion of Kuwait in August 1990).
Nothing similar is likely to happen now. For the present surge in prices — crude oil costs have risen by 74% over the past year — no such easy solution is in sight. To begin with, we face not a sudden spike, but the results of a steady, relentless climb that began in 2002 and shows no signs of abating; nor can this rise be attributed to a single, chaos-causing factor in the energy business or in global politics. It is instead the product of multiple factors endemic to energy production and characteristic of the current era. There is no prospect of their vanishing any time soon.