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And people wonder why I tend to take Saudi claims that they're against terrorism with a grain of salt

| 24 Comments | 2 TrackBacks

I mean, how else should we take their chief justice calling for jihad against US forces in Iraq as well donate cash towards said endeavors? And from the comfort of a government mosque, no less.

Moreover, Sheikh al-Luhaidan is hardly speaking a vacuum here, judging from the usual attendant holy men making similar statements while on the government payroll. Near as I can tell, the Saudi position seems to be somewhat akin to the blessing for the Tsar offered by the rabbi in "Fiddler on the Roof":

May God bless and keep al-Qaeda ... far away from us.

This might be something to raise with the Clown Crown Prince the next time he visits the ranch, don't you think? Yes, yes, I know that the Saudis have oil that we need, but this kind of continual behavior makes Adel al-Jubeir and the other Saudi mouthpieces look less and less credible every time they go on TV to talk about how much they hate terrorism.

UPDATE: Winds of Change.NET's Saudi Arabia Topic Archive has more material, ranging from Saudi duplicity over the years, to oil infrastructure issues, to Bin Laden's messages and their Saudi audience.

2 TrackBacks

Tracked: April 28, 2005 11:15 PM
Excerpt: The Word Unheard from Riyad, Saudi Arabia, is that the Saudis may realign their strategic interests towards France from The US and Britain, according to a Washington Institute report recently released. Meanwhile, the Saudi Supreme Judicial Council chie...
Tracked: May 5, 2005 1:25 PM
Excerpt: The other day, I noted that I was appalled by Pres. Bush being lovey-dovey with Crown Prince Abdullah and other members of the Saudi royal family / government (same thing): In between the schmoozing, the†sucking up, and the US promises to make it ea

24 Comments

I'm sure the Saudis are big Fiddler on the Roof fans.

The President's recent meeting and jolly-time reunion with Saudi prince Abdullah is not exactly comforting.

We should recognize - and give the impression - that Saudi Arabia is a trade partner and uneasy ally, not a long-lost brother.

That's my take as well, Mike.

I understand that we have to do business with the Saudis and other nasty characters, the spice must flow and all that, but I really doubt that say Islam Karimov gets this kind of treatment when he goes to Washington and he only brutalizes his own people.

You know, we could just push for an end to the need to import oil through efficiency and renewable technologies. Then we'd never be under the thumb of unsavory characters like the Saudis.

And if you don't think we're under their thumb already, go have a look at gas prices.

Not that I disagree with the idea of renewable energy, but there is the small matter of the lack of refining capacity in this country. We could have all the oil in the world in the US, but a lack of refineries won't turn it into gasoline, Saudis or no Saudis. Perhaps if we built one more than every thirty years.

#5,
Don't you believe in the wisdom of the market?

Oil refineries cost billions and need decades to recover the investment. No sane capitalist would invest the money when oil production peak is very likely before the refinery end-of-life. Decreasing crude production volumes will idle existing refineries, not to mention new ones. Buying refined products from existing refineries inside or outside of the US makes much more sense than trying to build new ones here.

Don't worry about peak oil. We haven't even hit peak bullshit about oil yet, alas.

#6, the Saudis have offered to build new US refineries for free. The reason it doesn't happen is environmental concerns.

UnderToad: That's exactly the solution to the problem; not only should we buy more oil from the despotic and freedom-hating Saudis, we should let them build refineries on our soil.

I mean, why would anyone want to pay American farmers to grow crops to produce biodiesel and ethanol when we can send the money to the same country that Osama bin Laden is from!*

*Can you feel the sarcasm?

Because gosh, it would be just pocket change to change an entire energy infrastructure to run on biodiesel fuel. Goodness. We must tell the King.

I say again, I'm in favor of renewable energy, but only if it is fiscally reasonable to do so. The market will determine that. In the meantime, if we are worried about cost, perhaps we could do things in this country to increase our self-sufficiency and decrease our reliance on foreign oil/refining capacity. Building one refinery in thirty years is not the way to do that. We can jaw all we want about peak production, but ask the Saudis how many refineries they built in the last five years.

And just so you know Paul, if you look at import/export data from 2004, you'll find that very little of our oil comes from Saudi Arabia.

Let's get some perspective here:

Here is the breakdown of imported oil for the United States per the US Department of Energy:

17.8% from Saudi Arabia
16.5% from Canada
12.8% from Venezuela
12.0% from Mexico
7.5% from Nigeria

The ones making up the remaining greater than 1% percentages were Angola, Algeria, Great Britain, Norway, and the Virgin Islands (2.0%)

Funny how you never hear that we are under the thumb of Canada when gas prices increase.

This is hardly a dependence on Middle East Oil; SA is the largest percentage, but hardly the majority. There is, however, a 42% dependence on OPEC members. But each individual OPEC member is merely one vote. I'm no fan of the Saudis and I agree with the tone of the original post; we shouldn't be all chummy with SA for a plethora of reasons. But even if bought all of our oil, from say, Canada.....oil is a commodity. The people who aren't then able to buy it from Canada would simply buy it from Saudia Arabia. SA has a product people want and economies need. That isn't going to change whether we buy it from them or whether Zaire buys it from them. Now, we can take the approach of subsidizing industry to retool hundreds of engine factories worldwide to run on biodiesel fuel (not to mention advertising campaigns, factories, home heating, an entire refueling infrastructure, and of course, the obligatory explanations of why 35% of them don't start during the winter) or we can be realistic, and formulate an economically feasible plan to turn to alternative energy as prices for oil increase, all the while trying to reduce our cost by reducing refining and other supply chain costs here.

Its a little more complicated than "gasoline prices as proof of being under Saudi Arabia's thumb".

Funny you should mention refinery capacity. That's just one part of the price equation, though an important part. The other chief culprit is the fact that refineries have to produce 18 different blends of gasoline in America, including one kind that is sold only in California. Why? Not for fuel efficiency's sake. I happened to have posted about this yesterday:
http://www.donaldsensing.com/?p=146

Great post, Donald. I agree. I was going to put that in as well, but it just seemed to complicate the post.

The fact is that "the problem is that we are dependent of foreign oil" has kind of inserted itself into current rhetoric,and its just not true. We have sabotaged our own capacity to be self sufficent, as Don pointed out. We have a backwards energy policy, and even if we didn't, because of the way the oil market works, it won't affect the Saudis pockets whether we buy from them or not. If we don't somebody else will, and the balance book for the House of saud remains the same.

Undertoad wrote in #8:

"the Saudis have offered to build new US refineries for free."

Do you have a source for this? If true, it would seem to me that would be the best way for "environmentalists" to sink any new refineries being built. Couldn't they just say "you know who is paying for this" and support would wane?

I am suspect that our economy is ready to transition to alternative energy sources at this point but the Saudis building refineries for us is like a crack dealer giving a junkee a free crack pipe. Is it fair to compare a group of murderous thugs to crack dealers?

The ACD (Association of Crack Dealers) is likely to file a protest if we do. They got standards, ya unnerstan'...

Jim,

Name one alternate liquid fuel that is cost competitive in the quantities required.

Personally I'm a fan of wind. But as an engineer I must be realistic - until the price comes down, and it will - wind is no current threat to coal or nukes. It is a niche market substitute for natural gas. Which is not a bad place to start. However, wind electrified America is a 50 to 100 year project.

The same goes for bio-fuels. If you grow the feedstock expressly for conversion to fuel it is not cost competitive. If you are economically limited to processing agricultural waste there is not enough high conversion value feedstock.

We are going to be using oil in a big way for a long time to come.

M. Simon

I agree that "We are going to be using oil in a big way for a long time to come." And no I cannot name any alternative fuel that is cost competitive in the quantities required. That is, in part, why I said: "I am suspect that our economy is ready to transition to alternative energy sources at this point."

The main points of my argument, obtuse though they were, are that (1) the Saudis would not be building refineries for us "for free"; they would be building them for their benefit and (2) if, in fact, they have offered to pay for them it would be a colossal PR mistake by proponents of refinery building to admit that the Saudis were paying for the new construction.

Why do we continue to support the Saudi's? They are from the western side of the country. The oil is primarily in the Eastern Provinces which are predominately Shia. They are ethnicly Arab. Why not just do a Diem on the al-Sauds? I am sure the Shia will want the SPICE to flow.
As to energy at home oil refineries are not the only problem. The Enron California energy trading market scandal showed that the lines of transmission do not always go to where demand is. Failure to protect them on a maintainace basis lead to the East Coast black out that orginated in Ohio(BTW the breakerswitch worked other wise those lines would have burned to ashes as they continually were fed more electric power) when a tree knocked down a major transmission line. The legislation and regulation coming out of that debacle does not give control to one regulatory body let alone spell out whom should pay for the maintainence of the lines.

The distributed, feudal nature of power in Saudi Arabia gives them all the vices of dealing with a democracy and none of its virtues - some of the power centers there are our friends, some are our enemies, some are in some sense both, and there are limits to our ability to predict which ones will retain power in the years to come. All we can say for certain is that we should never take gestures of friendship from the Saudis as evidence of a lack of enmity, nor vice versa.

"the Saudis have offered to build new US refineries for free. The reason it doesn't happen is environmental concerns."
This is pretty funny. I suppose it is that crew of rabid environmentalists currently running Texas and the US presidency that is stopping those public-spirited Saudis from building refineries for "free"! Or maybe it is that enviro madman Tom Delay who is halting construction due to his nefarious green proclivities!
Somehow, Republicans run the Congress, the White House, many state governments, most of the Courts, and yet somehow they still manage to be victims of the all-powerful environmentalists. Is there no room for common sense in the victimology?

What would building a refinery for "free" mean? Who would own it when construction was done?

Recent refinery accidents with multiple fatalities should remind us that refining is indeed a dirty and hazardous undertaking that any sane citizen would want to see well regulated. The fact that BP's Texas refinery had 3 accidents this year, with 15 fatalities occurring in the last accident, would seem to indicate that refineries are not currently over-regulated (unless you think 15 deaths/year is too few, and their permits should allow up to say, Bhopal levels (18,000 or so)).
3rd accident

Importing refined gasoline makes more economic sense than building trillion dollar refineries, so absent government subsidy, gasoline will be imported and refineries will not be built.

I suggest that anyone who believes in "peak oil bullshit" instead of peak oil, put their money where there mouth is and invest in futures trading with their superior knowledge. They could show up all those professionals who are buying and selling $50+ futures.

Tom, what you are describing is what we are doing now. Right now we are close to peak capacity in the world, not just in the United States. So we just wait, I suppose, until someone builds one so we can buy it from them? Here's an excerpt from Donald's article:

"The problem is increasing demand without commensurate increase is supply, for the bottleneck is the capacity to refine petroleum, according to the report. In fact, American refineries are approaching total effective capacity. According to the American Petroleum Institute,

The utilization rate for the first three months of 2005 averaged 91.7 percent of capacity, the highest for the first quarter in seven years, API said. Marchís utilization rate, at 92.2 percent, was also the highest for that month in seven years, API reported.

Gasoline production, which rose 1.2 percent over year-ago levels, set a record first-quarter high of 8.45 million barrels per day, as did output of distillate fuel oil, up nearly 7 percent to 3.79 million barrels per day, API said.

It might seem that there is still eight percent increased capacity that could be used, but the margin costs for achieving incremental raises in production get higher and higher in refinery operations, maintenance and payroll, one reason why increased deliveries of gasoline donít result in lower prices. Also, every part of a refinery must be taken off line periodically for repairs and maintenance, so actual 100 percent capacity canít be achieved; Iíd guess that 92-plus percent is getting close to what is attainable in practice and even that level will probably be difficult to maintain over the long term."

Importing refined gasoline used to make economic sense, when gas prices were half of what they are now. As demand continues to increase, and it will, we are going to need to have an economically feasible solution that does not exclusively involve reliance on foreign supply chain.

David Warren has a good article up about the Saudis. And Luhaidan? His books are apparently distributed in America, via the Saudi embassy.

Lovely. Read and weep.

"Saudis offering to build refineries in the US for free":

OK, I can see where they might consider doing such a thing. But I haven't seen any source cited that moves this notion out of urban-legend territory.

" Why not just do a Diem on the al-Sauds?"

One answer to this question might be to review history and look at what happened the last time we "did a Diem".

Was it successful in the long run?

By proposing use of old military bases for oil refineries in his energy speech, GWB and company are once again showing their distrust for market systems, since use of government property is clearly a major subsidy and market distortion (I know, it's OK when R's do it).

With hybrid vehicles showing exponential growth rates, oil refinery planners are likely expecting a plateau or even a decline in US gasoline consumption rates, so the best response from both a public and private point of view is to let the market signal of high gas prices lead to more efficient use and demand destruction (International Energy Association had a piece out recently suggesting that governments not interfer with the high gas price market signal with market manipulations).

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