US President George W. Bush warned on Tuesday it would be a “mistake” for OPEC ministers meeting in Vienna to ignore the pain record-high oil prices are inflicting on the United States, the world’s top energy consumer.
In some of his strongest language to date, Bush turned up the heat on the Organization of the Petroleum Exporting Countries, source of about a third of the globe’s oil supply. Oil prices set new highs above $100 a barrel this week and average US gasoline pump prices crept nearer to their record $3.22 a gallon set last May. “My advice to OPEC -- of course they haven’t listened to it -- my advice to OPEC is understand the consequences of high energy prices, because I do,” Bush told reporters after talks with Jordan’s King Abdullah at the White House. “I think it’s a mistake to have your biggest customer’s economy to slow down ... as a result of high energy prices,” Bush said.
In real terms, the US oil price of $103.95 a barrel set on Monday is the highest on record, including the price shocks of 1978-1980, when prices doubled due to a revolution in Iran. As oil prices have climbed, Bush has become more outspoken on OPEC. During a January visit to Saudi Arabia -- the world’s biggest oil exporter -- Bush said it “will be helpful” if OPEC raised its production. “They’re definitely heating up the rhetoric and saying it’s not their fault” that oil prices are so high, said Frank Verrastro, an energy expert at the Center for Strategic and International Studies. Verrastro said that if the White House was truly interested in lowering oil prices it would stop sending crude oil into the US emergency stockpile. “If you’re begging people to put oil on the market why in the world are you taking it off?” Verrastro said. The Energy Department says reserve shipments have a minuscule price impact. Bush spoke as OPEC ministers met in Vienna to chart policy amid indications the 13-member group will hold output steady. OPEC has said triple-digit fuel has been driven not by a lack of oil but by factors beyond its control, such as speculative investment and a weak dollar.
At a US energy conference, Energy Secretary Sam Bodman was more restrained than the president, saying it “would be good” if OPEC raised production. But Bodman said speculators help drive the global oil market. “Look, the price of oil is set in the trading rooms in New York and London and Tokyo and Frankfurt and all around the world,” Bodman said. “Whatever it is, it is.” The International Energy Agency, adviser to 27 industrialized nations, did not urge an output increase. It merely said OPEC should hold output steady, even though oil markets are “very tight” and spare capacity to meet unseen outages is slim. “The level of production -- if OPEC continues that, maybe that will replenish the necessary level of the stocks in coming quarters,” IEA Executive Director Nobuo Tanaka told reporters.
Guy Caruso, head of the Energy Department’s statistical arm, said OPEC needs to boost its output by 300,000 to 500,000 barrels per day (bpd) to help sagging global oil stockpiles. That would be an increase of only 1.5% from OPEC’s total January output of 32.23 million bpd, according to EIA data. (Reuters)