Why should Saudi Arabia go out of its way to drive the price of oil down? It’s perfectly rational for a producer to try to maximize the returns for his product.
Microsoft, for instance, persists in charging hundreds of dollars for its software — even though they could sell downloads for next to nothing. They do this because they are rational economic agents.
Here, in Canada, we’re ramping up production in the oil sands as quickly as possible — to more than double exports to the U.S. by 2012. That follows a special request from the Bush administration & we’re happy to do our bit (and take your money too). However, the world would be a lot better place if less money were flowing into the middle east, and if the U.S. economy were on a stronger footing.
The U.S. is already the world’s third largest producer of oil & it has plenty of oil reserves (an enormous quantity, if you count oil shales — and you should). The U.S. has the capacity to drive down the world price of oil, to whatever level you chose — simply by drilling, and digging up your own supplies.
Comparing oil to Microsoft products is apples and oranges. The average American does not have to buy products from Microsoft in order to live. The same cannot be said of oil. Oil is what drives our economy, period.
I completely agree that were the U.S. to start drilling it's own reserves the price would drop (and I suspect much sooner than some are suggesting). However, there are those who do not want to see our reserves tapped as they are against use of fossil fuels, period. These people make the claim that drilling our own reserves would have zero impact on the price, and that it would take way too much time to obtain any benefit. But, it's a smoke screen used to manipulate those who don't know better.