Stabilizing the oil market is in the interests of both the United States and Saudi Arabia, President Bush's national security adviser said Monday following a meeting at the Texas White House between the president and Saudi Prince Abdullah (search).
"The price level, both the United States and Saudi Arabia agree, needs to be one that provides an adequate return of investment but isn't so high it damages the market and our economy," Stephen Hadley (search) said.
Hadley said the two countries were working on a plan to increase production capacity to 12.5 million barrels a day by the end of the decade and to 15 million barrels a day in the next decade in order to bring prices down and stabilize the market. Saudi Arabia currently pumps about 9.5 million barrels daily.
Hadley sought to soothe anxieties about skyrocketing gas prices, which have hurt the president's approval rating.
"The problem with the market today is the perception of inadequate capacity," he said.
Stressing that the plan proposed long-term fixes to the oil market as well, Hadley said, "We need to assure people the supply will be available as economies grow," presumably referring to growing giants India and China.
Monday's meeting appeared to comfort the market somewhat: Crude oil futures settled down 84 cents at $54.55 on the New York Mercantile Exchange.
Earlier, Bush said he expected the two countries to come to an acceptable solution to lure prices back down.
"The Crown Prince understands it's very important to make sure prices are reasonable. High oil prices damage markets — he knows that. We're going to talk about his country's capacity — it's an important subject," Bush said, after telling reporters he had a "good relationship, important relationship" with the Saudi leader.
The president surprised reporters when he came out with Vice President Dick Cheney; aides had said neither he nor Prince Abdullah would speak to the media. The two were awaiting the Crown Prince's arrival.
Bush used the opportunity to urge the Senate to act on an energy bill that was previously knocked down over possible exploratory drilling in the Arctic National Wildlife Refuge (search) in Alaska. The House passed a version of the bill last week.
"One thing's for certain — I need to sign an energy bill," Bush said. "Now's the time for something to happen."
Moments later, SUVs carrying the Crown Prince and his aides arrived.
Bush and Cheney walked down a path at the ranch to greet Abdullah and his small entourage, which was nearly a half hour late to the meeting. The president gave Abdullah a warm embrace and they kissed on both cheeks.
Bush chatted about bluebonnets growing around the building as he guided the prince into an office at the ranch. Meeting the group at the office door were Hadley, White House Chief of Staff Andy Card and homeland security adviser Fran Townsend. Secretary of State Condoleezza Rice also joined the group.
Bush's goal of spreading democracy across the Arab world faces a difficult test in Saudi Arabia, a longtime ally ruled by a monarchy. Bush usually holds news conferences with visiting foreign leaders, but there was none during this visit because Abdullah rarely talks with the media.
The two leaders discussed the growth of democracy in the Middle East, and specifically the stability of Iraq.
When asked about reports the White House was impatient for Iraqi leaders to form a government, Rice said: "We've been very clear that the process in trying to form a government out of the very successful elections is an Iraqi process, and it has to be an Iraqi process."
And while the Saudis and Americans have previously differed on the subject of Israel, Hadley said both leaders agreed they should help facilitate the Israeli withdrawal from Gaza.
"The focus is very much on what we can all do to assist the Palestinians to be able to develop the institution of democratic states, that is, prepare to take responsibility for the territory they will take control of," Hadley said.
Two weeks ago, Bush met at the ranch with Israeli Prime Minister Ariel Sharon and said Israel should abandon plans for new construction of Jewish settlements in the Palestinian territories. The Saudis believe the administration's strong support for Israel harms prospects for peace in the Middle East.
Despite the difficult matters, Robert Jordan, a former U.S. ambassador to Saudi Arabia, said the stage was set for a much friendlier meeting than three years ago for Abdullah's first visit to the ranch. For one thing, the late Palestinian leader Yasser Arafat, a polarizing figure, is now gone — replaced by an elected president of the Palestinians, Mahmoud Abbas. Abbas will have his own meeting with Bush in the next few weeks.
Jordan noted that Saudi officials also have played an instrumental role in persuading Syria to withdraw its troops from Lebanon. They have been supportive of increasing oil production at crucial times. And Abdullah has taken some initial steps toward introducing democracy to Saudi Arabia by holding elections for municipal councils, even though women's rights remain severely restricted, political parties are banned and press freedoms are limited.
The Associated Press contributed to this report.