Saudi Strains Could Fuel Gas Prices

Showdown With Saudis Could Pump Up Gas Prices

“We're particularly concerned about increasing reports of provocative acts and sectarian violence by all groups. The use of force and violence from any source will only worsen the situation and create a much more difficult environment in which to arrive at a political solution.”

-- Secretary of State Hillary Clinton at a press conference in Egypt when asked about the crackdown on Shiite protestors by the Bahraini royal family and their Saudi cousins.

When the Obama administration calls for a “political solution” for the unrest in Bahrain, it is a tacit endorsement of regime change.

The country is predominantly Shiite, but ruled for centuries by a previously benevolent Sunni royal family, cousins to the Saudi royals at the other end of the King Fahd Causeway. A “political solution” would presumably mean elections. And elections would mean the moderate, pro-western Sunnis would, at the very least, have to share power with the more radical, Iranian-backed Shiites.

That is not a trend the Saudis, locked in a battle with the Iranians for dominance in the Middle East, would like to see. Not only would it set a precedent for deposing mostly benevolent Sunni monarchs, but also because Bahrain sits at the center of the world for transporting the oil that keeps the House of Saud afloat.

The Saudis and the other Sunni potentates of the region are not at all interested in political solutions. They are interested in obtaining the obedience of their subjects. These are not the figurehead rules of Western Europe who just cut ribbons and hold fancy weddings. These are old-fashioned autocrats who exercise absolute power in the same fashion as Louis XIV.

Saudi troops have joined with the Bahrainis to drive protesters out of the central square of Manama and squelch smaller uprisings in smaller communities. Human rights watchers say at least six people died when troops stormed the square wielding batons and spraying tear gas and rubber bullets.

Perhaps imbued by the spirit of Tahrir Square on her trip to Cairo, Secretary of State Hillary Clinton spoke out rather forcefully against the gathering effort of the Sunni monarchs of the Persian Gulf to keep the Shiites at bay.

Relations between Riyadh and Washington were already strained after President Obama cast off Egyptian President Hosni Mubarak. Now, with Washington pushing for the controlled demolition of the ruling order of the Gulf states, the Saudis are unlikely to listen to any calls for restraint.

The U.S. Navy has already ordered nonessential personnel out of the formerly commodious accommodations of the Fifth Fleet in Bahrain, and may soon have to find a new home if relationships between the Sunni elites and the U.S. continue to deteriorate.

But the larger concern is, of course, oil. The Saudis have obliged America by increasing their production of oil to keep prices stable amid mounting global energy concerns. It’s good business, because an oil shock could decrease the overall appetite for Gulf oil by provoking a double-dip recession.

But the Saudis are well-armed, very rich, loyally revered by most of their subjects and the custodians of the holy places of Islam. If anyone is in a position to play hardball with protestors and the Obama administration, it is the sons of Ibn Saud.

White House Touts Swift Response in Libya as Rebels Face Massacre

"Anything that moves, anything that drives, they shoot it down.”

-- Ali Faraj Hammada, leader of the revolutionary committee in the Libyan city of Ajdabiya, speaking to the Wall Street Journal as he fled for the final rebel stronghold of Benghazi.

The final rout of the Libyan rebels is underway as the siege of the rebel capital, the port city of Benghazi, has begun.

White House Press Secretary Jay Carney’s struggle to defend President Obama on charges of dithering over the conflict went awry on Tuesday under a barrage of questions about the gap between Obama’s rhetoric (“tightening the noose”) and weeks of diplomatic back-and-forth as the rebellion bloomed and then withered.

“...we have acted with great haste, and we have coordinated international -- led and coordinated -- an international response, the likes of which the world has never seen in such a short period of time,” Carney said.

Making such a bold claim about a package of international sanctions and diplomatic palaver in the face of a month-long crisis in Libya took many in the White House press corps aback. To compare what Obama has done in Libya to previous interventions in similar situations – like the invasion of Kuwait – sounded too weird.

The U.S. has now signed on to a British and French proposal in the U.N. Security Council to enforce a no-fly zone over the country. But many analysts say that it is already too late for such a measure, arguing that the rebellion is past saving.

It may even be a moot point by the time the Security Council votes on Thursday.

Libyan dictator Muammar Qaddafi has reclaimed control of the nation’s substantial oil reserves and has forced a weeklong retreat for the once triumphant rebel army. His forces, augmented by a pan-African brigade of mercenaries and the shock troops of other despots, have now pinned down the rebels in the scene of their first victory, Benghazi.

The rebels are vowing to make a final, bloody stand. And since they likely know they face death if captured, the rebels have reason to die at the barricades rather than surrender.

Nuclear Backtracking Underway

"I still think that nuclear power is an important part of our overall energy mix. But I think, like everything else, we've got to make sure it's safe. It's similar to offshore drilling. Everyone's now concerned about our oil prices. Last summer, everyone was concerned about the oil spill."

-- President Obama in an interview with WVEC of Hampton Roads, Va.

As his surgeon general told Californians that stocking up iodine tablets might be a reasonable precaution in the face of the ongoing nuclear crisis in Japan, President Obama worked hard to emphasize the limited risk to Americans from the incident.

But, Obama did begin backing away from his embrace of nuclear power last year, drawing a direct comparison between the emission-free power source and the gulf oil leak that bedeviled his energy policy for months last year.

The nuclear situation in Japan seems increasingly dire.

Emperor Akihito made a very rare address to his subjects remarking on the nuclear crisis following last week’s earthquake, saying he was “deeply worried” about the damaged reactors in an effort to restore calm. While large-scale, unshielded meltdowns like the one at Chernobyl are not a concern, partial meltdowns may have occurred in two reactors and could lead to the emissions of large plumes of radioactive gasses.

While Californians may not need to be stocking up on detox kits, the misery of the Japanese people – especially the 440,000 forced from their homes by the earthquake, tsunami and nuclear evacuations – will certainly increase.

As the drama unfolds, look for the administration to move further away from nuclear power.

Warren Faces House Republicans as Complaints Over Financial Regulation Grow

“We want the [Consumer Financial Protection Bureau] to have a very tangible presence for anyone who visits Washington.”

-- Prepared House testimony from the mother of the new agency, Elizabeth Warren, discussing plans for a new headquarters across the street from the White House, as provided to the Associated Press.

President Obama put Harvard professor Elizabeth Warren in charge of establishing a new consumer bureau governing banks and lending even though it was widely known that she could never win Senate confirmation to run the agency she is creating.

But today, Warren will still face questions from highly skeptical Republicans on the House Financial Services Committee about her efforts.

The agency is set to open on July 21, but Warren has already prompted an uproar by joining with state attorneys general in an effort to force mortgage lenders to pay $20 billion in fines for not properly processing foreclosure paperwork.

Conservatives are increasingly alarmed about the broad mandate and vaguely defined powers of Warren’s agency, which they say will cause lenders to pull back rather than face her wrath. Today’s Wall Street Journal Editorial Page called the agency “a bureaucratic rogue.”

Warren’s outspoken stances and repeated warnings to banks have made some Democrats nervous, too.

Rep. Shelley Moore Capito, R-W.Va., is proposing having a five-member, bipartisan board, a la the FCC, lead the agency rather than a single person. She may find some support for her plan.

Carbon State Democrats Face EPA Test Today

“It’s going to be close, and, just as important, it’s going to put Democrat rhetoric to the test.”

-- Republican Senate aide discussing an expected vote today on a plan to block the EPA from imposing global-warming regulations.

A bill to block the EPA from imposing limits on carbon dioxide emissions the agency says are causing global warming sailed out of the House Energy Committee and is expected to have no trouble passing the full House in the days to come.

But Senate Republicans are not waiting for the process to play out. Sen. James Inhofe, R-Okla., the leading foe of President Obama’s plan to hit industry with global warming penalties, has proposed an amendment to a pending small business bill that mirrors the House legislation.

Senate Majority leader Harry Reid is eager to advance the bill, and said Tuesday he will likely allow an up-or-down-vote on Inhofe’s plan.

While it seems unlikely that Republicans can rally the 13 Democratic votes they would need to advance the measure, it’s not out of the realm of possibility. As those facing 2012 reelection bids consider ad scripts that include lines like “… voted to protect President Obama’s job-killing global warming scheme,” many must be giving the Inhofe amendment serious thought.

West Virginia Democratic Sen. Jay Rockefeller is offering a compromise plan that would only bar the agency from going after global warming for two years. There might be broad support for the plan if the Inhofe measure fails.

Whatever happens, the vote on Inhofe’s amendment will raise the political heat on many vulnerable Democrats in the Senate.

Obama has promised to veto a standalone bill that stifles the EPA, but it’s not clear what he would do to a politically desirable small-business bill that included the measure.

And Now, A Word From Charles

“As to the revolt among the conservatives, that is very interesting on the Republican side. I think the conservatives are rather zealous here and they may be overreaching. You don't want to shut down, and it won't help Republicans. If you are getting, as we are, a cut of $2 billion a week, even in the continuing resolutions, that's real money.”

-- Charles Krauthammer on “Special Report with Bret Baier” discussing the defection of nearly a quarter of the House Republican Caucus on a three-week stopgap funding measure.