Hospitality from the House of Saud

One of the more troubling subplots running through "State of Denial" involves Prince Bandar, the long-time Saudi ambassador to the United States. By Woodward's account, when then-Texas Gov. George W. Bush decided to run for president, his worried father enlisted Bandar, an old family friend, to tutor the son on foreign policy. When Bandar arrived in Austin, the younger Bush blithely observed that while he had lots of ideas about domestic policies he didn't have a clue about foreign affairs. The Saudi took him under his wing, but he proved a trying pupil, who addressed his mentor as "asshole" and "smart aleck." (Perhaps this is how hereditary princelings affectionately address each other?) At one point, the younger Bush peevishly demanded to know why he needed "to care about North Korea." Bandar pointed out that, if he became president, he would have 35,000 American troops sitting on the DMZ.

Oh, right....


During a meeting in the Oval Office, according to Woodward, Bush personally thanked Bandar because the Saudis had flooded the world oil market and kept prices down in the run-up to the 2004 general election.


Paul Hue said...

1. And you would 100% support Bush despite this if he only adopted policies that you liked.

2. If the Saudis flooded the oil market for Bush II in 2004, why didn't they do so for Bush I in 1992? Why did Clinton enjoy the lowest oil prices of all time during his stretch? I think that you and Nadir have lots to learn about real economics. As far as conspiracies are concerned, many mighty powers crave low petro prices, surely more than who crave high petro prices. Walmart, the evil US automakers and non-evil trade unions, all businesses related to travel, all Americans with Dow-based stock portfolios, the list is endless. Those business (ie, groups of humans organized as businesses) suffer from high petro prices... until inevitably those high prices lead to more exploring, drilling, refining, etc., leading just as predictably to lower prices.

Paul Hue said...

Can you guys please get settle on one conspiracy:

1) Bush invaded Iraq to obtain cheap oil to keep the US economy and repo votes flowing;


2) Bush invaded Iraq to jack up oil prices to boost profits for Saudis and Exxon?


Paul Hue said...

Tom: Are you any more supportive of me and Christopher Hitchens' views on Iraq, given that we are as intellectually diligent as you and Nadir?

Tom Philpott said...

Son, I understand economics; oil prices fluctuate for lots of reasons: speculation, surges in demand, sudden gluts or drops in supply. But Bob Woodward claims that in 2004, Bush thanked the Saudis for flooding the market to drive the oil price down. Either it's true or Woodward made it up or was misinformed. What do you think?

Further, oil prices were in a state of free fall in the 1992 election season, mostly due to the unwinding of speculative positions made during the Gulf War. Did the Saudis intentionally flood the market in 1992? i have no idea; maybe, maybe not. I've seen no evidence either way. did they do it in '04? Well there is this bit of evidence that Woodward claims that Bush thanked them for doing so.

Interesting, too, that Bush got schooled in foreign policy by a Saudi scion.

Hey, i'm not making this stuff up; i'm just reporting.

Paul Hue said...

Tom: Maybe Bush thanked the guy. What's the source for that? Who's the guy in the room that reported this to Woodward? I read the piece, and Woodward doesn't explain how he could get the quote, not even from an "unnamed source." In any case, if Bush is as stupid as you and Nadir are certain he is (only smart enough to get a slightly better Yale GPA than Kerry), he might really think that the Saudis have such power; or he might have been making a joke.

Tom Philpott said...

Paul, there no question that the Saudis "have such power." They have huge influence over the supply part of the supply and demand curve that governs oil prices. If they want prices to spike, all they have to do is slash production--or hont at such a move. If they want prices to fall, all they have to do is jack up production--or hint at such a move. Their power to do the latter has diminished in the past 5 years, as India and China have greatly increased their oil demand, forcing the Saudis to produce at near peak capacity to keep up; but they still probably have a bit of slack.

On the demand, the US is such a big user that fears/rumors of a recession can cause prices to tumble, as is evidently happening now, as can projections of a warm winter. Conversely, the reverse of those conditions holds. China is fast becoming a force to be reckoned with as well.

But as far as I know, no knowledgeable economist or oil analyst denies the Saudis influence over oil prices.