No Bush for Oil

I'm sure the upcoming October Surprise won't be anything so prosaic as lower gas prices.
Today, Senator John Kerry quickly seized on Mr. Woodward's assertion on Sunday that the Saudi ambassador to the United States had agreed that his country would make sure that oil prices did not get too out of hand and would lower them to boost the American economy prior to the election -- a decision that would presumably help Mr. Bush politically.

Mr. Kerry, who has come under attack from the Bush campaign for a past proposal to raise gas taxes, said Americans were now paying billions of dollars more for gas due to a "secret White House" deal to manipulate prices for political reasons.

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34 Responses:

  1. cyeh says:

    OPEC recently decided to cut back production, driving oil prices up. Now that this connection has been alleged, it'll be great fun and games to see how this turns out.

    If Bush strongly denies this, and oil prices go down anyway, Bush will lose credibility. (No deal? Yeah right!)

    If Bush says nothing and oil prices go down, it'll make him look guilty of hiding the secret deal.

    So at this point you have a quandary. Do you call Saudi Arabia and tell them to keep oil prices high because it would appear bad, thereby shooting your economy in the foot? Or do you tell them to drop the prices and deal with the political consequences?

    Saudi Arabia suddenly has complete control over a potentially disastrous political situation for Bush.

    There are few good outcomes for this. And that makes me smile.

    • harryh says:

      Dude, you're thinking way to hard. If the economy is doing well (low oil prices generally being good for the economy), people aren't really gonna care why, they'll just be happy, and more likely to vote the incumbant in.

      But back to the main issue, I don't really see what's so bad about Bush making a deal with the Saudi's to keep oil prices low. I'd think that would be a good thing?

      • cyeh says:

        I had a comment in an earlier draft that I decided to cut out. And that was whether the media would bother to say boo about this or not.

        Anyway, to the main issue: well, it depends on whether you feel the ends justify the means or not. The context of the alleged agreement was that the US would remove Saddam from Iraq in exchange for low oil prices in an election year.

        Is low oil prices a bad thing? No. Is negotiating low oil prices a bad thing? No. Does invading a country to ensure low oil prices a good thing? Well, that depends. But it can sure look bad.

        You could also argue that we were going to invade Iraq anyway and that we might as well get cheap oil from Saudi Arabia along with the deal, but I think it stinks.

        • harryh says:

          You could also argue that we were going to invade Iraq anyway and that we might as well get cheap oil from Saudi Arabia along with the deal, but I think it stinks.

          I would *definitely* argue this. And I think anyone who doesn't beleive this argument hasn't really been paying attention.

        • jabber says:

          "The Media" is a profit-earning enterprise. As such, it will do what benefits those whose policies will enable "the media" to profit more. Where ya been?

          Also, low oil prices are a side-effect of hegemony over oil markets. The main purpose of such hegemony is to control the price that the likes of the European Union, where the prices are actually realistic, has to pay. He who controls the spice, controls the universe; he who controls the price of petrol, controls the economy of anyone who relies on imported oil.

          The fact that American auto SUV makers are getting fat on unrealistically low oil prices is just the icing on the cake.

          And, we invaded Iraq not so much for the oil or the price thereof, but because OPEC was considering switching from trading oil in terms of dollars per barrel, to Euros per barrel. That slight shift in currency would have severely undermined the relevance of the dollar, and therefore of the United States, in the global economic market.

          Why Iraq, what with the sanctions and oil for food restrictions and all? Geography. With the exception of Venezuela, which is in nine different kinds of economic Hell as it is (and the US can bail it out at will), strong influence over Iraq gives the US a commanding geographic position over the major OPEC players. They're all scared shitless over a US presence in the Middle East, because, with Iraq pulling out all the stops in oil production, the US would control the second largest oil-producing capacity in the world. This would make OPEC irrelevant, or at least toothless.

          Why do you think the US has been kissing Israel's ass for all these decades? To keep a foot in the door of the Middle East. Now that we have Iraq (more of less), the Israelis are falling all over themselves to make nice with those dirty Palestinians. Sure, they killed the leader of the Hamas, again, but they're offering to withdraw from (some of) the "disputed territories", which they invaded against UN dogma, back when OPEC was getting ready to spring the oil embargo on the world. Do you think Israel didn't know that an oil-hungry world would let them get away with it, in exchange for a western influence in the region?

          God, don't people take civics and political science classes any more?

          • harryh says:

            And, we invaded Iraq not so much for the oil or the price thereof, but because OPEC was considering switching from trading oil in terms of dollars per barrel, to Euros per barrel. That slight shift in currency would have severely undermined the relevance of the dollar, and therefore of the United States, in the global economic market.


            The rest of your post is pretty much conspiracy theory bullshit as well, but I don't have an extremely respected (and somewhat left wing even) economist to directly site on the various subjects you wandered into.

            • cyeh says:

              Yay. You quoted Krugman!

              Yes, Krugman leans left in many of his columns. I think he's at his best when he sticks to pure economics. He wanders off and gets lost in the field the further from econ he gets.

            • jabber says:

              I'm sure GWB would also say it's bullshit. I guess it *must* be.

              • harryh says:

                I'm not exactly sure what your point is, but I just provided a link that provided a lucid counter argument for one of your assertions. Do you agree with what Krugman has to say or not?

                What's the point of having beleifs if they don't stand up to even the most basic of attacks?

                • jabber says:

                  Firstly, there is a world of difference between a belief and an opinion. What I voiced was opinion. But I applaud your attempt at trolling. Nicely done, have a cookie. Now, to address the point...

                  I disagree with Krugman because I think his counter-argument is incomplete. Just because he makes a cleanly laid out argument does not change the world to suit his conclusion. He addresses the textbook definition of currency, and were all things equal, he would be right. Should OPEC switch currencies, the dollar would still serve the same functions as it does today.

                  However, there is a psychological value the dollar enjoys above any other currency. The value of money is intimately linked to the stability of the state that issues it, and this stability is a direct consequence of that state's power. The reliance on a currency, especially by people outside of a state, is an acknowledgment by those people, of that state's power.

                  The Great Krugman himself says that 60% of physical US currency is held outside the US. That's a great vote of confidence and trust in the US being there tomorrow. It's an expectation of stability, of leadership and of respect. For OPEC to use the dollar says to OPEC, and to everyone who buys oil from OPEC, that OPEC believes the US is top-dog.

                  Krugman completely neglects the psychological and aesthetic importance of the perception of the dollar as a global "lingua franca". The Euro is an up an coming challenger. If OPEC were to switch, the perception of importance would also switch.

                  Would fewer people outside the US hold paper dollars if the dollar were not the unit by which the world's most essential resource was measured? Quite probably. The dollar, over time, would cease to be a global currency, and become a national currency, and the psychological message, I think, would be that the US is on the wane, that it is no longer a global power, but rather just another large and powerful nation.

                  The dollar is America's reputation, and like a reputation, it precedes American culture, American values, and American influence. Wherever the dollar goes, American things and America itself follows. Were the dollar to stop going places, "Pax Americana" (You can't deny it - more people emigrate to the US each year than to all other nations combined, brought by the reach of the dollar) would grind to a halt in a couple of decades.

                  I grew up in Poland, in the 70's and early 80's. My tickets to come to the US were paid for in dollars. Whenever anyone I knew went to the US and returned to Poland, they brought some of that 60% of expatriated dollars, because dollars meant power, freedom, a way to open doors the local, less appreciated domestic currency couldn't budge. The black market ran on dollars, and people bought American jeans and American cigarettes, with American dollars, while listening to "Radio Free Europe", an American propaganda station designed to undermine the Communist propaganda.

                  Trust me, the perception of the power of the currency, the meaning of it, and the attitude toward it's state of origin, is a huge, HUGE factor. If the world's top resource switched to a different currency, other resources would soon follow, and a dollar would quickly become "just another currency" in the minds of people outside the US. This change in perspective would result in a change in their view of the US as well.

                  • jwz says:

                    because dollars meant power, freedom, a way to open doors the local, less appreciated domestic currency couldn't budge.

                    I've never understood this. Do you mean to say that if you offered someone 397 Zloty, they'd say no, but if you offered them 100 Dollars, they'd say yes? Doesn't that just mean that the exchange rate is not, in fact, 0.2518? I don't get why people would prefer one currency over another when there's a defined exchange rate that the banks will honor. Is it just because they're bad at math?

                  • taffer says:

                    Fear that the {insert local currency} will crumble even more on the way to the bank, or before they can use the cash for something? I imagine people in a situation like this would grab for any kind of more-stable currency...

                  • jkonrath says:

                    I always thought it had to do with the fact that the Zlotys were essentially useless (or at least not as useful) outside of Poland, and the government was offering a fixed rate for dollars to Zlotys, so it would be beneficial for a third party to acquire your dollars, and they would pay a premium for them. It's more like an illegal form of arbitrage.

                  • jabber says:

                    It's quite different now, as goods are much more readily available. But if you went to Iraq where the currency was just completely revalued, or to Argentina where the value of the domestic currency is effectively nil, and offered people dollars for their domestic currency at that day's exchange rate, or even at a loss, how many would rather have something with muscle behind it?

                    It's not about the exchange rate itself, but rather about the backing of the value of the money. This is why I don't buy the counter-argument. The perception of the money is bigger than the exchange rate.

                    In a way, it's about reputation. If two people act exactly the same way, but one has a good reputation while the other has a bad one, which will you trust? We'd like to say that we'd treat people equally until given a tangible reason to do otherwise, but you know this isn't true.

                    Under Communism the value of Eastern Bloc currency was false. It worked in-country, but there was nothing to buy there with it. People in the West had no use for Zlotys, Rubles or East German Marks. But dollars, Pounds and West German Marks were "real money", and the dollar was the most real of all. This perception made the dollar worth more than the exchange rate, and it still matters.

          • cessibaby says:

            thank you for being clear and informative, we often need to be reminded of what seems blatantly obvious

          • trurle says:

            he likes of the European Union, where the prices are actually realistic
            One can assume that in your universe EU customers pay higher price for crude oil in comparison to US ones. I have to disappoint you: oil costs exactly the same for all consumers; exorbitant gas prices in Europe are result of punitive taxation.

            • wsxyz says:

              exorbitant gas prices in Europe are result of punitive taxation.

              Not exactly. More correctly stated, gas prices in the entire industrialized world outside the USA are the result of massive taxation.

              Gasoline tax is undoubtedly high everywhere else except for here, but what should "punitive" mean? Well, high gasoline taxes help discourage people from buying gas-guzzlers and from wasting gas. That could be called "punitive" since bad behavior is being punished, but why shouldn't bad behavior be punished anyway?

              High gasoline taxes do more than punish, however. They also help pay for alternative means of transportation, and for cleaning up the mess that cars make. Those seem like reasonable goals to me too.

            • jabber says:

              I fail to see your point, or maybe that point isn't important to me. The price paid to get from place to place, to have goods delivered to stores, is higher, and in this manner the economy is managed differntly then in the US.

              The EU governments depend on that tax money coming in to fund their various programmes, public transportation, medical and legal systems, and so on, same as here.

              Were the price of crude oil to double, the US economy could absorb the damage more easily than could the EU economy. The US government could cut back spending to buffer the price than could the EU. The average US consumer could more easily shell out more at the pump (unless he's driving an SUV) than could the average EU consumer, who would instead have to garage the car and take the bus. The American suburbanite doesn't even have the option of a bus in most places, and would be forced to feed the economy.

              By being able to tighten the oil spiggot, the US can influence the EU population, and thereby apply pressure to the EU government, on trade, mutual defense and troop placement, UN dealings, and so on.

              Of course it's not black and white, and is in fact very convoluted, but whenever something doesn't make sense, you have to look at which way the money is moving. If crude prices go up, how with the EU flow of money change? The US flow? Where do US gas taxes go? What do EU gas taxes pay for? When crude prices go up, which one can afford to cut taxes more, to keep the fuel prices down?

      • en_ki says:

        The problem is not necessarily making a deal to keep prices low, but rather making a deal to keep prices high until the election, then lowering them when it's advantageous to the President. By arranging to extend a period of higher prices, the President is making life worse for millions of Americans in order to gain political advantage for himself and his allies, which is a fine reason to vote against him; and since this political advantage would come from the creation of a false perception of military and diplomatic success for the nation as a whole, it is also an act of deception directed against us. Such deception has been a habit of this Administration from the beginning, and this enrages me.

        • harryh says:

          The problem is not necessarily making a deal to keep prices low, but rather making a deal to keep prices high until the election

          Well sure, but there is no evidence that a deal of this nature ever existed.

          • en_ki says:

            OPEC recently lowered oil production, which makes prices go up. They have promised that later on, closer to the election, they will make prices go down. I would call that "strong circumstantial evidence", not "no evidence".

        • susano_otter says:

          Bush is making the prices higher now, to make himself look bad. Then, in November, he'll make them lower, to make himself really good by comparison to how bad he made himself look earlier?

          Wouldn't it make more sense to just use whatever influence he has to keep prices as low as possible all year long?

          • en_ki says:

            I wouldn't expect so. People generally react to recent changes, not ongoing states. "Wow, it's cheaper all of a sudden!" vs. "Hey, look, the price is still lower than it was two years ago. Ho hum."

            • susano_otter says:

              Intuitively, this makes sense. I don't know how realistic or reliable the effect actually is, though.

              Certainly the current administration seems to spend a lot of time looking really bad, content to allow events to run their natural course (or artificial course, as the case may be), while allowing the media and public opinion to run wherever they may.

              Still, it seems like a pretty thin platform on which to build a conspiracy theory.

              To me, anyway. I already know we're "in bed" with the Saudis. I already know there's copious amounts of closed-door diplomacy going on. I already know that Kerry is planning on exactly the same policy, or else he needs to plan on getting his ass handed to him in the oil market and subsequently by his own citizens.

              At least, I assume these two outcomes cover pretty much all the possible bases, given the complete lack of a comprehensive short-term solution to U.S. oil dependency from any credible faction.

              Assuming the "conspiracy" to bring down gas prices is for real, exploiting the realities of the situation and the exigencies placed on the Executive branch, to score political points during an election season strikes me as hardly the best way to make a better tomorrow for this country.

              If that's the best Kerry can do, "vote for me because the president is using diplomatic tricks to cheat his way into your hearts", then he's far too long on problems and short on solutions to be a credible candidate anyway.

              He can do better than that, though, right?

    • volkris says:

      The American public isn't nearly as full of conspiracy buffs as you seem to think.

      If Bush denies it and the oil prices go down few will believe the connection without further proof.

      If Bush doesn't deny it and prices go down few will believe the connection without further proof.

      This is insignificant, though I'm sure the sensationalists will have their fun. Fortunately the public isn't as quick to buy this sort of sensationalism as one might think...

      • happyshane says:

        Yup, it's all mad tinfoil beanie land over at cbs:

        But, it turns out, two days before the president told Powell (of the decision to go to war), Cheney and Rumsfeld had already briefed Prince Bandar, the Saudi ambassador.
        "Saturday, Jan. 11, with the president's permission, Cheney and Rumsfeld call Bandar to Cheney's West Wing office, and the chairman of the Joint Chiefs, Gen. Myers, is there with a top-secret map of the war plan. And it says, `Top secret. No foreign.' No foreign means no foreigners are supposed to see this," says Woodward.

        "They describe in detail the war plan for Bandar. And so Bandar, who's skeptical because he knows in the first Gulf War we didn't get Saddam out, so he says to Cheney and Rumsfeld, `So Saddam this time is gonna be out, period?' And Cheney - who has said nothing - says the following: `Prince Bandar, once we start, Saddam is toast.'"

        After Bandar left, according to Woodward, Cheney said, "I wanted him to know that this is for real. We're really doing it."

        But this wasn't enough for Prince Bandar, who Woodward says wanted confirmation from the president. "Then, two days later, Bandar is called to meet with the president and the president says, `Their message is my message,'" says Woodward.

        Prince Bandar enjoys easy access to the Oval Office. His family and the Bush family are close. And Woodward told 60 Minutes that Bandar has promised the president that Saudi Arabia will lower oil prices in the months before the election - to ensure the U.S. economy is strong on election day.

        President Bush passed state secrets to the ambassador of a nation known to support terrorism. This foreign power has agreed to manipulate oil prices in an attempt to influence the election.

        Still, at least he isn't lying about blow jobs.

        • susano_otter says:

          Still, at least he isn't lying about blow jobs.

          And of course the source of the story, isn't lying about anyting at all, right?

          Given the fact that several administration members have flatly contradicted Woodward's claim, including Powell himself, is there any reason to believe this story? Beyond the typical and mind-numblingly boring partisan "he said, she said" election year bullshit reasons, that is?

        • volkris says:

          See? This article is MUCH tamer than the original huge conspiracy theory.

          You did make a mistake, though. It's not "agreed to manipulate oil prices"; it's more of an offer. At least if this account is to be believed.

          And you really don't want to dredge up Clinton on this one. Making a strategic decision to reveal a "no foreign" document to a foreigner is light years away, and light years better, than much of the stuff Clinton is know to have leaked with no possibility of US advantage.

  2. linoleumcp says:

    One day Bush is able to piss off the entire Arab world by endorsing Sharon's plans for Gaza and the West Bank!

    The next Bush is able to work secret deals with the same countries in OPEC to help ensure his re-election!

    Face it, the man is [b]unstoppable[/b].

    Insert eye-rollage here.

    • beowabbit says:

      Actually, that's not as far-fetched as it seems. The support for the Palestinian cause on the part of Arab governments, while probably real, is not very deep. It's good political theatre. Yes, innocent Palestinian civilians are getting a raw deal, but most of the Arab political èlites don't oppose the occupation out of compassion, they do it because it increases their power over their own people (or slows its erosion).

      (And of course that sort of thing is not limited to those countries. On a much smaller moral scale, think about the period when popular, or at least populist, opinion in the US was up in arms about the loss of US manufacturing jobs to Japan, as symbolized by Japanese cars. Sure, it affected US-Japanese trade and political relations a bit, but the political and economic èlites in both countries knew which side their bread was buttered on, and the actual effect on trade and foreign policy was much less than the rhetoric might have suggested. At least so I think; I'm not an expert on this sort of thing, that's just my impression from following the news.)

    • wsxyz says:

      There was an excellent article in "Die Zeit" online recently about "Bush's backing of Sharon's plans".

      George Bush has officially recognized what everyone already knew: A mass return of Palestinians to the areas in which they lived before 1948 will never occur, just as a return to the 1967 borders will never occur.
      In any case, it was never the American position that Israel should pull back to the 1967 borders. Bush's assurances are nothing more than a bit of realism.

  3. irma_vep says:

    I would trust the Israelis over the Saudis' when it comes to helping us. I think the Saudi goverment resents American inteference in the Middle East, and it doesn't surprise me that the Saudi ambassador would trip up Bush. The Saudis' are wealthy and pampered by the US, but I think they secretly despise Americans.