RIYADH, Saudi Arabia – High oil prices socking U.S. consumers will be a key topic of Vice President Dick Cheney's talks Friday with Saudi King Abdullah but it's unclear whether Cheney will ask the Saudis to increase production.
Early this year, the oil producing nations ignored President Bush's request to increase supplies so that gas prices, which are up over $3 a gallon, could fall. Bush asked the Saudis, a main player in OPEC (Organization of Petroleum Exporting Countries) to push oil producing nations to pump more oil when he was in Saudi Arabia in January.
Cheney's advisers cautioned in advance of Friday's talks that oil was just one item on a long list of discussion topics which include Iran, Syria, Lebanon, protecting infrastructure against terror attacks and the vice president's visit this week to Iraq and Afghanistan. They said Cheney would review with the king steps that the consuming and producing nations can do, both in the short and long term, to stabilize the market.
"They will review a broad agenda of diplomatic and security issues as well as where we are now in the global energy market," Cheney's national security adviser, John Hannah, told reporters on board the vice president's plane as he flew from Oman to Saudi Arabia. "They will have ample discussions about the problems that exist in the market and how they might be solved," he added.
"And I am sure they will talk about the need for a cooperative way forward to try and stabilize this market, reduce volatility in the market and serve the interests of both consumers and producers alike," Hannah said.
Cheney was greeted at the airport here by the king and the two shared tea inside before heading off for the talks.
In Iraq on Monday, Cheney had noted that there currently is very little spare capacity in the global oil market. he said the declining value of the U.S. dollar was putting upward pressure on oil prices as well as increasing demand for oil in China, India and in the oil producing nations themselves.
Light, sweet crude for May delivery fell 70 cents to settle at $101.84 a barrel on the New York Mercantile Exchange Thursday after sliding to as low as $98.65 earlier. It was the first dip by a front-month oil contract under $100 since March 5. On Wednesday, the expiring April contract fell $4.94 a barrel to settle at $104.48. Most financial markets in the U.S. and many other countries will be closed for Good Friday.
Earlier this week, Bush said his administration was "on top of the situation" in dealing with a slumping economy at home. Bush spoke on a day of turmoil and plunging prices on global financial markets. Oil prices had hit a record in Asian trading, U.S. stock index futures fell sharply and the dollar hit record lows.
The White House said on March 11 that the problems associated with soaring oil prices are "not going to be solved overnight" and that "it would be wrong" of Bush to promise otherwise. Presidential spokeswoman Dana Perino said "there are some things we cannot do." Her comments came as oil prices rose above $109 a barrel for the first time. They were as low as $87 a barrel in January.
Perino said at the time that the White House was concerned about the impact of spiraling oil prices on consumers and small businesses. But she said, "It would be wrong of the president to provide false hope to people to think that we are going to be able to have an immediate impact to reduce gas prices. This is something that we're all going to have to work through."
A week before that, Bush said the United States had to "get off oil" to reduce dependence on foreign suppliers and declared "it should be obvious" that high demand is creating painful gasoline prices.
Bush's assessment was at odds with that from the 13-nation Organization of Petroleum Exporting Countries, which said before he spoke that it would not put more oil on the global market because crude supplies are plentiful. OPEC President Chakib Khelil told reporters in Vienna, Austria, that the problems in the U.S. economy were a key factor in the cartel's decision to hold off on any action.
"There is sufficient supply. There's plenty of oil there," he said.
In an address to the Washington International Renewable Energy Conference, Bush said, "It should be obvious to you all that the demand is outstripping supply, which causes prices to go up."
During his Middle East trip in January, Bush urged OPEC to increase production, saying it was a "mistake to have your biggest customers' economies slowing down as a result of higher energy prices."
The White House said it disagreed with OPEC's decision to rebuff that request, and that the oil-producing nations themselves could be hurt as well.