Posted on 04/26/2005 4:48:42 PM PDT by Destro
Wednesday, April 27, 2005
India oil diplomacy creates ripples in US
K.P.NAYAR
Washington, April 26: Mani Shankar Aiyar’s petroleum diplomacy is creating ripples here in America’s dealings with oil producing countries.
At the end of two days of intense meetings at the presidential ranch in Texas between Saudi crown prince Abdullah, top US officials and George W. Bush, American secretary of state Condoleezza Rice surprised reporters yesterday when she referred to India’s oil-related activity as a cause for “concern” for Americans.
“Obviously, with the states like China, India and others coming on line, there is a concern about demand and supply”, Rice said to reporters in a briefing on the US-Saudi summit.
America is reeling from high petrol prices: in many areas, motorists now pay almost double what they paid at this time last year for filling up their cars.
Although pump prices in the US are substantially lower than in Europe and Asia, the virtual absence of viable public transport across America has severely hit motorists here.
Yesterday, Bush’s job approval ratings was down to a worrying 48 per cent, mainly on account of rising petrol prices.
In 2001, Bush took office threatening to “jawbone” oil producing countries into lowering oil prices. He may then have had visions — since thwarted — of Iraqi oil smoothly flowing into American petrol pumps by now.
In sharp contrast to such bullying of the Organisation of Petroleum Exporting Countries (Opec) that was promised to American voters five years ago, Bush and vice-president Dick Cheney were yesterday pleading with the Saudis to do something about oil prices.
Reading between the lines, the Saudis came to the Bush ranch confident in the knowledge that they are now secure in their ability to develop stable, long-term alternative markets to the ones in America.
Clearly India is among those as a country with rising demand for energy and plans to meet that energy because of Aiyar’s petroleum diplomacy. Last month, Aiyar visited Saudi Arabia and initiated talks on long-term, guaranteed supplies from the kingdom.
To buttress that co-operation, Aiyar began talks with his Saudi counterpart, Ali al Naimi, for the setting up of a Saudi refinery in India, which will import crude from the kingdom and sell refined products to the Indian market.
A Saudi-Indian petrochemicals joint venture in Saudi Arabia’s industrial town of Yanbu to go on stream this year will annually produce 100,000 tons of paraffin and 800,000 tons of alkyl benzene.
Possibly because of these alternatives, in their discussions with Bush and Cheney, the Saudis carefully skirted the issue of setting up more refineries in the US.
This has been discussed as a Saudi priority some years ago. National security adviser Stephen Hadley confirmed the omission. “That specific issue did not come up,” he told reporters. “This is one of a range of issues that we will have an opportunity to follow up on with the Saudi side, now that they have begun to pull together the kind of plan that they talked about.”
Hadley said: “They are talking about a plan that would allow them to go to about 12.5 million barrels a day (of crude output) by the end of the decade, and plans in the next decade to increase that over time to about 15 million barrels a day in order to help stabilise the market and ensure an adequate supply at a reasonable price.”
It is not a plan that brings any immediate relief to Americans. Already there are scattered reports in the US media of American motorists filling up their tanks and driving away without paying.
One West Virginia newspaper yesterday quoted a petrol pump manager as saying: “Just at this pump, we have seen about a third of an increase in the number of drive offs as the prices have spiked.”
Our nation's problem isn't the amount of crude oil, it's the amount of refinery capacity.
and what are we going to do about it? We control ALL branches of govt and state houses in states that would be willing to to have such industries. How long till we stop blaming the Clintons?
You can't "jawbone" your way to lower prices on anything. Thats embarrassing. You lower prices by drilling and building refineries.
If there isn't enough competition to make that happen, then that is where you intervene, to increase competition. The US government stood by and watched the majors merge and merge again during the nineties, and fewer players in any market is not in the consumer's interest.
But present policy is to allow mergers, and make the construction of any kind of energy facility exceedingly difficult. Tenured professors may think thats a great idea, but if you work for a living, or aspire to, its not good news.
from the Bloomberg article, "April 25 (Bloomberg) -- Saudi Arabia plans to invest in oil refineries in India as part of its push to expand capacity in Asia, home to the world's fastest growing energy markets, after failing to secure licenses to build new refineries in the U.S."
I'll never tire of blaming the Clinton's, but your point is well taken. Having an R next to your name is no proof of a backbone.
Energy prices on the world market are not coming down in the near term. The Chinese and Indian economies are growing, and with a combined population of nearly 10 times ours, even baby steps are like earthquakes. Its not just fuel, steel and concrete are being vacuumed up like crazy and the prices are through the roof. Its the new reality.
With advances in communications, there is no need to build your factory near your consumer, so you will want to build it where they want you. California doesn't want you, and few other states want you. If you don't have to, you won't build there.
China does want you, and so does India, and so does Mexico. So does Brazil. Why would anyone in their right mind build anything in the US?
And since the Asian market potentially dwarfs ours, the added distance to the US becomes even more a non-issue.
I am glad you brought up how mergers have reduced competative pricing in this industry.
I doubt that China and India are paying full price for oil. No way does a China or India have the ability to pay full price and in cash. They supply something that Iran, Venezuela, Arab countries want and get a discount. That something is cheap consumer goods and advanced weaponry. Not stating proven fact, this is my theory.
Blaming the Clinton's and getting all excited that Hillary may run for president is fine and all but Repubs have been in power for 4 years going now - uncontested power at that. Use it or lose it.
Exxon & Mobil, Shell & Texaco under the table, BP and Amoco and Arco, Conoco-Phillips, Texaco and Chevron, with Chevron picking up pieces of Phillips, and so on and so on. All this while Clinton was busy going after Microsoft.
Absolutely.
China and India do pay full price and cash for oil - it's one of the biggest expenditures of government. India doesn't really make advanced weaponry (just starting to do so now - definitely nothing sold) - it obtains weapons from Israel, France, and Russia. China makes weaponry, but it isn't great.
Actually, Asian countries (China, India, Japan, and the rest) pay *higher* prices for oil - there's a small surcharge (well, small in percentage terms) imposed on oil sales to Asian countries - I'm not sure of the reasoning behind it but it definitely exists.
Thanks. China has weapons to sell and nuclear bomb making technology. Also missile technology. Plus the Chinese stooge North Korea has been selling missiles to Iran and probably missile technology
The Saudis are outsourcing to India (too).....
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