Crown Prince Abdullah shares a laugh with President George W. Bush in Crawford, Texas, on Monday after he presented the US president with a gift. (SPA)

WASHINGTON, 27 April 2005 — President Bush’s meeting with Saudi Crown Prince Abdullah at his ranch in Crawford, Texas on Monday focused on soaring global oil prices as well as political reform in Saudi Arabia, the Israeli-Palestinian conflict, and the so-called “war on terror.”

But it was the price of oil that topped the agenda. Crude oil prices hit record highs in April, briefly topping $58 dollars a barrel. Nationwide retail gas prices have climbed to over $2.28 a gallon.

The Saudis reiterated their recent pledge that the oil-rich nation will soon increase its output, currently running at 9.5 million barrels per day.

But Adel Al Jubeir, Prince Abdullah’s foreign affairs adviser, told reporters in Crawford that Saudi leaders had little to offer Bush beyond that, saying the high prices are the result of a lack of adequate refining capacity in the United States and elsewhere.

“Saudi Arabia is producing all the oil that our customers are requesting,” he said.

James Paul, executive director of the New York based-Global Policy Forum, and author of the report “Oil in Iraq: The Heart of the Crisis” (www.globalpolicy.org), warned that world production is reaching its peak.

“The Bush administration would have the US public believe that there’s an unlimited supply of oil and that the nasty environmentalists and greedy sheiks are keeping oil from reaching consumers. It’s a catastrophic lie. There is growing consensus that worldwide oil production is reaching its peak. The Saudis are now pumping very near full capacity and all of OPEC is operating at full tilt. OPEC has been trying to lower oil prices to keep the markets stable but without success. Worldwide demand is going up and supply can’t rise to meet it.

“The US is thirsty for more, the markets in China and India are growing rapidly, so market forces are driving prices higher and higher. The administration’s plans for controlling Iraqi oil, and putting US and UK companies in charge, have thus far been a failure. Exxon’s profits are setting new records, but the world’s energy future is in chaos for which the oil giants are largely responsible,” Paul said.

“What’s happening is that world production is hitting its peak now, and the Energy Information Administration in the US projects that world production of petroleum will rise up to 125 million bpd by 2025, and that’s way off the charts. Oil is not running out, but it is reaching its peak,” said Paul.

Paul voiced misgivings over the US invasion of Iraq. “Many believe the war was about gaining control over Iraq’s oil reserves for the US and UK, but this was a desperate gamble because Iraq has huge super-giant fields, such as Majnun, and there are expectations they will find some new fields in the western desert. The problem is that oil companies new technical capacities for finding oil is the way up, but the results are way down, and as a result we’re experiencing a worldwide crunch.”

Tyson Slocum, research director for Public Citizen’s Critical Mass Energy and Environment Program, said Americans should examine what’s happening within the US oil industry. “Since Bush took office, the largest five oil companies operating in the US have after-tax profits of $205 billion. We need to examine the relationship between US oil company profits and the higher prices for consumers and American industry. For example, in 2004, ExxonMobil — the product of the 1999 merger between Exxon and Mobil — chalked up the world’s biggest-ever profit for a single company: $25.3 billion. Is it possible that ExxonMobil and other US oil companies are making part of their profits off price gouging?

“It is possible that, just like Enron constricted supply in California by ordering power plants offline in order to create supply shortages to jack prices up, US oil companies are keeping supplies offline and waiting to release those supplies until prices rise enough to make it worth their while? The potential is there.”