In an article titled the New York Times has once again instructed us on Saudi Arabia's exemplary oil policies.
In the article, we are informed that the Saudis had invested some $60 billion to boost their oil production by 2 million barrels/day. Well and good, but whose data is this? The Saudis have been notoriously opaque about their oil reserves and true production capability, and virtually all aspects on matters of oil -- even though much of the world's economy has been dependent on their resources.
Obligingly, the article tells us that "because of the global recession Saudi Arabia was forced to shut down about a quarter of its production." That this mindless reporting makes no reference to the willful OPEC production cutbacks -- and Saudi Arabia's highly active role in orchestrating them -- is incredible.
Nor does it mention that the global recession came about in significant measure through Saudi Arabia's active role in pushing oil prices to $147/barrel in the summer of 2008, (thereby becoming a major contributor to the collapse of the housing market as buyers became frightened about the cost of reaching their new homes in cars burning increasingly expensive gasoline. Please see: "The Why of Chokingly High Oil Prices: Bush Together with Saudi Arabia Spells Disaster For America" 05.12.08)
The Times then goes on to quote Khalid A. al-Falih, the CEO of Aramco, the Saudi state-owned oil company: "We experienced the same cash flow constraints that everybody did." Really? "But we adjusted quickly and certainly, and everything that was strategic to us was not touched." Meaning what?
Then we are further enlightened that "American talk about energy independence rankles Saudi officials, who maintain the goal is unrealistic." You see, according to the article, the Saudis are deeply concerned it might result in higher prices for us over the long term.
Dear Reader, I'll leave it to you to determine the gravity of Saudi concerns about higher oil prices.
And then we are made aware that the Saudis had graciously been "discounting" oil shipments to the United States by charging $1/barrel less than shipments to refiners in Asia. That would have come to slightly over one million dollars a day. This while the American Treasury was expending $100 million per day protecting Saudi Arabia and its shore line by stationing a flotilla of warships in the Arabian Gulf -- a great deal if you can get it
The Times also informs us that for "the first time in more than a decade, the world has more oil than it needs." Well, a decade ago, when the world had less oil than it needed, the price of oil was under $20/bbl. It would have been too much to ask that the Times' interlocutor to have queried Mr. Khalid al-Fatih as to how he explained the disparity in pricing of $20/bbl then and $80/bbl today, given that "the world has more oil than it needs" these days. But a question such as that would have been too aggressive for the Times as the exemplar of the media's disinformation on oil markets and their price distortion.