Bush Presses Saudi King Abdullah on Oil.
Comes Back Empty-Handed

TABASSUM ZAKARIA & MATT SPETALNICK / Reuters 16may2008

President George W. Bush held talks with Saudi King Abdullah on Friday to seek help in taming record oil prices and shore up Arab support for his efforts to contain Iran's growing influence.

Bush, on his second visit to Saudi Arabia this year, was renewing his appeal for a boost in OPEC output amid rising pressure at home to do something about high fuel costs weighing on the economy. But he was expected to fare no better than he did in January, when he was rebuffed by the Saudi monarch.

"We do count on the OPEC countries to keep adequate supplies out there, so the president will talk again with the king about that," White House spokeswoman Dana Perino told reporters travelling with Bush.

As Bush flew into Riyadh, the White House said the United States, the world's largest energy consumer, had agreed to help protect the resources of the world's top oil exporter and help it in developing peaceful nuclear energy.

The announcement came as Bush ended a three-day trip to Israel where he vowed to oppose Iran's nuclear ambitions.

RESISTANCE TO OIL PLEAS

While Bush was likely to find common ground on Iran with Abdullah, the Saudi monarch has shown little sign of budging in his resistance to Bush's calls to get OPEC to pump more oil into world markets.

Since Bush's last visit, oil prices have jumped nearly $30 to around $126 a barrel [actually they went to  $127.82 a barrel], adding to U.S. recession fears and ratcheting up political pressure on the White House.

"Clearly the price of gas is too high for Americans," Perino said. "We have not enough supply and too high demand. Trying to get more supply out there is good for everyone."

Despite U.S. frustration with the Saudi position, it was all smiles and handshakes as Abdullah greeted the president and first lady Laura Bush on the airport tarmac.

They then rode together in a limousine to the king's sprawling horse farm outside Riyadh, the centerpiece of a visit the White House says is mostly to pay tribute to 75 years of formal ties between Washington and the Islamic kingdom.

"We're honored to be here," Bush told Abdullah as they sat side by side inside an elaborate tent.

The two leaders will have a packed agenda as they try to improve ties that deteriorated in the aftermath of the September 11 attacks in 2001 and the U.S.-led invasion of Iraq in 2003.

The United States ended more than a decade of military operations in Saudi Arabia in 2003 amid resentment in the kingdom over the American military presence.

COOPERATION

As part of the new oil security arrangements announced on Friday, the White House said the two allies would conclude an agreement for broader cooperation between the Saudi Interior Ministry and the U.S. government, but gave no details.

Apart from agreements to cooperate on nuclear energy and oil security, the White House said Saudi Arabia agreed to join two global initiatives -- one to combat nuclear terrorism and another to fight the spread of weapons of mass destruction.

For his part, King Abdullah will be looking for reassurances on Bush's commitment to push a $1.4 billion U.S. arms sale through an opposition-led U.S. Congress.

Democrats have threatened to block the deal to pressure Saudi Arabia to increase oil output. OPEC members have blamed high oil prices on speculators and not any shortage of supply.

Bush travels on to Egypt at the weekend to meet Palestinian leaders, and before then he will press the Saudis to do more to support faltering U.S.-sponsored Israeli-Palestinian peace talks. He wants to achieve a deal before he leaves office in January, but the deadline is widely regarded as unrealistic.

Bush also wants Saudi Arabia and other Arab nations to strengthen ties with Iraq, something they have been reluctant to do since the U.S.-led invasion that many of them opposed.

Editing by Kevin Liffey

source: 16may2008

Bush Fails to Win Saudi Help on Gas Prices

TERENCE HUNT / AP 16may2008

President Bush failed to win the help he sought from Saudi Arabia to relieve skyrocketing American gas prices Friday, a setback for the former Texas oilman who took office predicting he would jawbone oil-producing nations to help the U.S.

Bush got a red-carpet welcome to this desert kingdom, home to the world's largest oil reserves, and promised to ask King Abdullah to increase production to reduce pressure on prices, which soared past $127 for the first time Friday. But Saudi officials said they already were meeting the needs of their customers worldwide and there was no need to pump more.

Their answer recalled Bush's trip to Saudi Arabia in January when he urged an increase in production but was rebuffed.

Saudi oil minister Ali al-Naimi said the kingdom decided on May 10 to increase production by 300,000 barrels a day to help meet U.S. needs after Venezuela and Mexico cut back deliveries.

"Supply and demand are in balance today," al-Naimi told a news conference, bristling at criticism from the U.S. Congress. "How much does Saudi Arabia need to do to satisfy people who are questioning our oil practices and policies?"

Early this week, Senate Democrats introduced a resolution to block $1.4 billion in arms sales to Saudi Arabia unless Riyadh agreed to increase its oil production by 1 million barrels per day.

Saudi Foreign Minister Saud al-Faisal said the discussion with Bush about oil was friendly. "He didn't punch any tables or shout at anybody," the minister said. "I think he was satisfied."

That couldn't be said for at least one of the candidates hoping to succeed Bush in January. Said Democrat Hillary Rodham Clinton: "I think it's very important that we do something more dramatic than going to have tea with the Saudis."

National Security Adviser Stephen Hadley said consumers would not see dramatic price reductions. Oil experts agreed.

Bernard Picchi, an energy analyst at Wall Street Access, an independent research firm, called the 300,000 barrel Saudi production increase "a token amount."

It would be different, he said, if Saudi Arabia boosted production by 1 million or 1.5 million barrels a day. The announced increase will have Saudi Arabia pumping 9.45 million barrels a day by June, Saudi officials said. That's about 2 million barrels below its capacity. Analysts also discounted the impact of the U.S. Energy Department's announcement that it would cancel shipments into the Strategic Petroleum Reserve for six months beginning July 1.

"It's ridiculous because I don't think this is going to bring the price down," said Phil Flynn, analyst at Alaron Trading Corp., of the Energy Department's move.

Midway through a five-day Mideast trip that began in Israel and ends in Egypt, Bush spent the day with Abdullah at his weekend retreat outside the capital. It is known as a horse farm since the king maintains 150 Arabian stallions there. The farm also produces thousands of goats and sheep, bred for the king's royal banquets.

The sagging U.S. economy and painful gasoline prices are the top concerns of Americans in the heart of a heated presidential campaign. The run-up in oil prices has been alarming.

Futures prices of crude on the New York Mercantile Exchange have more than doubled in the past year, from $62.46 a barrel in the first week of May, 2007. Prices reached $100 a barrel for the first time in February and continued rising. They closed at $126.29 Friday. [actually they went to  $127.82 a barrel]

On Jan. 26, 2000, during a presidential debate, Bush opposed taking oil from the Strategic Petroleum Reserve and instead said then-President Clinton should "jawbone" oil producing nations. That week crude oil prices were $28 a barrel.

Hadley said the Saudis briefed Bush on plans to increase their production capacity. They also argued that even an increase would be unlikely to bring down the soaring prices, which they said were driven more by uncertainty in the market, lack of refining capacity for the type of oil readily available and other complicated dynamics.

Economists say prices are being driven up by increased demand, not slow production. China and India are stretching supplies as they use ever increasing amounts of energy.

Hadley suggested the White House was satisfied with — or at least accepted — the Saudi response. However, he said the Bush administration will see if the explanation "conforms to what our experts say."

Hadley said Bush and the king also focused on Iran and concern about recent violence in Lebanon, where Hezbollah overran Beirut neighborhoods last week in protest of measures by the U.S.-backed government. The display of military power by the Shiite militant group, which the U.S. considers a terrorist organization, resulted in the worst internal fighting since the end of Lebanon's 1975-90 civil war.

Sunni-dominated Saudi Arabia — eager to stop any advance of regional power by Shiite-dominated Iran — joins the West in supporting Lebanon's government. Hadley said Bush and Abdullah shared a concern that the recent events would "embolden Iran." The U.S. and Saudi Arabia, he said, "are of one mind in condemning what Hezbollah did."

On Thursday, Hezbollah and the Lebanese government reached a deal to end the violence after Lebanon's Cabinet reversed measures aimed at the militants.

Bush's visit was billed as a celebration of 75 years of U.S.-Saudi relations, though they have been frayed by Arab perceptions that Washington favors Israel too much in the dispute with the Palestinians, the Iraq war and the Sept. 11, 2001, attacks. The two countries used the occasion of Bush's visit to sign new agreements.

Among them was an agreement for the U.S. to assist the kingdom in developing civilian nuclear power. Another involves U.S. promises to help protect any Saudi nuclear infrastructure with training, the exchange of experts "and other support services as needed." Hadley said it would not involve U.S. troops.

Saudi Foreign Minister Saud al-Faisal, at the news conference with the oil minister, said he shared Bush's hope for a Mideast peace agreement by next January but sharply criticized Israel for the "humanistic suffering weighed upon the West Bank and Gaza Strip population" of Palestinians. He said Israel's "continued policy of expanding settlements on Palestinian territories" undermines the peace process.

source: 16may2008