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Last update - 23:53 16/05/2008 Bush offers Saudis nuclear power in exchange for more oil By Reuters Tags: George Bush, Saudi Arabia  U.S. President George W. Bush, visiting the Saudi capital on Friday, hoped to formalize new agreements that would give the relationship between the two countries a boost. Among them was an agreement for the U.S. to assist the kingdom in developing civilian nuclear power. Another agreement involves U.S. promises to help protect any Saudi nuclear infrastructure with training, the exchange of experts and other support services as needed. Hadley said it would not involve U.S. troops. But the rising price of oil commanded attention. Advertisement Saudi Arabia's leaders made clear they see no reason to increase oil production until customers demand it, apparently rebuffing Bush amid soaring U.S. gasoline prices. It was Bush's second personal appeal this year to King Abdullah, head of the monarchy that rules this desert kingdom that is a longtime prime U.S. ally and home to the world's largest oil reserves. But Saudi officials stuck to their position that they will only pump more oil into the system when asked to by buyers, something they say is not happening now, the president's national security adviser told reporters. "Saudi Arabia does not have customers that are making requests for oil that they are not able to satisfy," Stephen Hadley said on a day when oil prices rose above $127 a barrel, a record high. "What the Saudis wanted to tell us was we're doing everything we can do ... to meet this problem, but it's a complicated problem." The Saudi oil minister, Ali Naimi, announced that the kingdom decided on May 10 to raise production by 300,000 barrels at the request of customers, including the United States. He said that increase was sufficient. "Supply and demand are in balance today, he told a news conference. How much does Saudi Arabia need to do to satisfy people who are questioning our oil practices and policies?" Bernard Picchi, an energy analyst at Wall Street Access, an independent research firm, said the 300,000-barrel Saudi production increase was a token amount that is not expected to have much impact on prices. "It would be different," he said, "if Saudi Arabia boosted production by 1 million or 1.5 million barrels a day. The announced increase will have Saudi Arabia pumping 9.45 million barrels a day by June, Saudi officials said. That's about 2 million barrels below its capacity." Oil prices advanced Friday as traders, unimpressed by efforts to boost supply, kept buying on the expectation that prices would keep setting new records. Saudi Arabia often adjusts its output to meet demand, and the increase coincides with the start of the peak driving season in the U.S. "It's a way to raise production without raising production," said Phil Flynn, analyst at Alaron Trading Corp. "I think it was a way to save face." Hadley never mentioned the Saudi's new production in his recap with reporters. He said the Saudis briefed Bush again on their plan to increase their production capacity over time. They also argued that even an increase would be unlikely to bring down the soaring prices, driven more by uncertainty in the market, lack of refining capacity for the type of oil readily available and other complicated dynamics, he said. Economists say prices are being driven up by increased demand, not slowed production. Energy-guzzlers China and India are stretching supplies. As a result, Hadley suggested the White House was satisfied with - or at least accepted - the Saudi response. He added, however, the Bush administration will see if the explanation conforms to what our experts say. Saudi Foreign Minister Saud al-Faisal said the discussion with Bush about oil was friendly. "He didn't punch any tables or shout at anybody," the minister said. "I think he was satisfied." High energy costs are a major drain on the U.S. economy, which is experiencing a slowdown that some think is already a recession. At the pump, gas prices rose to a national average of $3.78 per gallon on Friday, according to a survey of stations by AAA and the Oil Price Information Service. When Bush and Abdullah met in the kingdom in mid-January, the president also sought more Saudi output in a plea that also ultimately was for naught. Iran was the other dominant topic of Bush's overnight visit with the king. The two shared a concern over the recent violence in Lebanon, where Hezbollah overran Beirut neighborhoods last week in protest of measures aimed at the group by the country's government. The display of military power by the Shiite militant group, which the U.S. considers a terrorist organization, resulted in the worst internal fighting since the end of Lebanon's 1975-90 civil war. With Shiite-dominated Iran backing Hezbollah, Sunni-dominated Saudi Arabia - eager to stop any advance of regional power by Tehran - joins the West in supporting Lebanon's government. Hadley said Bush and Abdullah shared a concern that the recent events would embolden Iran. "The U.S. and Saudi Arabia," he said, "are of one mind in condemning what Hezbollah did." On Thursday, Hezbollah and the government reached a deal to end the violence after Lebanon's Cabinet reversed measures aimed at reining in the militants. Bush's Saudi stop was intended, in part, to celebrate 75 years of formal U.S.-Saudi relations and strengthen ties that, once strong, have frayed over the perception Washington favors Israel too much in the dispute with the Palestinians, the Iraq war and the Sept. 11, 2001 attacks. Fifteen of the 19 airline hijackers were Saudis, and Americans blamed Saudis for allowing the religious extremism that gave rise to them, an accusation that stings here. Bush was spending the day with Abdullah at his lavish farm complex outside Riyadh, talking mostly out of public view over multiple tea services and meals. Abdullah greeted Bush warmly at the airport, and rode with him in his limousine out into the desert. When Bush first ran for president in 2000, he criticized the Clinton administration for high fuel prices and said the president must jawbone oil producing nations and persuade them to drop rates. At that time, oil was nearing $28 a barrel - less than a quarter what it is now. Bush's visit comes two days after Congress voted to temporarily halt daily shipments of 70,000 barrels of oil to the nation's emergency reserve. After Bush's talks on Friday, his administration announced in Washington that it has canceled oil shipments into the reserve beginning in July, when the current purchase contract expires. Bush has refused to stop pouring oil into the Strategic Petroleum Reserve, saying the stockpile was meant for emergencies and that halting the shipments would have little or no impact on gasoline or crude oil prices. Related articles: U.S. diplomats: Saudi Arabia likely to join nuclear arms race Bush to Knesset: U.S. stands with Israel, Masada will not fall again Bush: We must be firm in face of those who murder the innocent Olmert to Bush: Israel intent on achieving peace deal this year Bookmark to del.icio.us   Animated massacre Animated Israeli film at Cannes explores Sabra and Shatila massacre. Kowtowing to funders When papers are sponsored, can their reporting be truly independent?   1.   Saudis did 9/11 now they get nukes 00:10  |  Wendy 17/05/08   2.   Israel starts a nuke arms in the M.E. 00:59  |  sam 17/05/08   3.   Nuclear energy for oil 01:02  |  Realistic Arab 17/05/08   4.   Into the Desert 01:31  |  David James Vickery 17/05/08   5.   IS HE CRAZY!!!!!!!! NO American people behind him on that one!!! 01:54  |  We have our own oil 17/05/08   6.   Joke of the month 02:15  |  Axel 17/05/08   7.   We`re giving the Saudis nukes!!! 02:25  |  Aphemia 17/05/08   8.   Realistic Arab 02:28  |  sweis Melbourne 17/05/08   9.   This article provides an answer for morris valentine 02:33  |  Axel 17/05/08   10.   The US plays both sides 02:35  |  American Cowboy 17/05/08   11.   Iraq Could Supply the Rest of Oil quantity that Saudis Refuse To 02:38  |  Joseph . E 17/05/08   12.   We have our own oil - Where? 02:38  |  TOO FUNNY! 17/05/08   13.   # 1 wendy 02:45  |  Axel 17/05/08   14.   Saudis can go to Hell 02:46  |  Brod 17/05/08   15.   Is has become a Post-USA world 03:02  |  Heinz 17/05/08   16.   tax the oil companies 03:09  |  easy solution 17/05/08   17.   The asumption is 03:30  |  Ploni 17/05/08   18.   NO to the Saudis 03:34  |  Brod 17/05/08   19.   #16 easy solution, not very practical 03:53  |  * BEN JABO 17/05/08   20.   YES TO SAUDI NUKES! 04:09  |  American Christian 17/05/08   21.   American Christian, I really hate to burst your bubble... 05:08  |  The Jesus of 17/05/08   22.   The goal of Bush policy is not cheap oil 05:15  |  Rowan 17/05/08   23.   Wait`ll they counter... 05:24  |  Colin Wright 17/05/08   24.   ??? 05:29  |  Colin Wright 17/05/08   25.   re #15 `Is has become a Post-USA world` 05:32  |  Colin Wright 17/05/08   26.   Saudi told him to bugger off 05:52  |  Mark Lincoln 17/05/08   27.   We have our own oil 05:56  |  Mark Lincoln 17/05/08   28.   Nuclear Energy and the Gulf 05:59  |  Mark Lincoln 17/05/08   29.   What to do with the morons? 06:02  |  Mark Lincoln 17/05/08   30.   LMFAO @ The Hypocrisy 06:09  |  *BEN JABO 17/05/08   31.   LMFAO @ The Hypocrisy 06:09  |  *BEN JABO 17/05/08   32.   Bush needs to stop endangering the security of Israel! 06:15  |  Proudest Zionist 17/05/08   33.   No 11. Iraqi oil? The secret`s out then..... 07:31  |  Palestinian Brit 17/05/08   34.   They probably already had nukes anyway 10:43  |  ghostoflutherblisset 17/05/08   35.   The Saudis are probably telling the truth 11:12  |  Clickfool 17/05/08   36.   Saudis and OIL (WENDY) 11:13  |  Gary from OH 17/05/08   37.   Saudis and 9-11 (WENDY) 11:23  |  Gary from OH 17/05/08   38.   Joke of the month 11:32  |  Gary 17/05/08   39.   An interesting little industry is developing in Britain 11:35  |  Clickfool 17/05/08   40.   SSupply and demand will always be in balance 11:43  |  Leo 17/05/08   41.   You are right Leo from London. Trading in my SUV for a motorcycle 12:44  |  :) 17/05/08   42.   Yeah, a pink three wheeler with a canopy, side car & basket 12:49  |  :) 17/05/08   43.   Nuclear Power for OIl 13:41  |  LJB 17/05/08   44.   The logic of a simpleton 15:09  |  Clickfool 17/05/08   45.   Israels oil security 15:38  |  motzo drnk 17/05/08   46.   Bush blows the mission 16:29  |  Natallie Durson 17/05/08   47.   This has to be stopped 17:32  |  Wendy 17/05/08   48.   Food for Oil 17:49  |  John 17/05/08   49.   A nuclear free ME before it`s to late 18:02  |  Maricela 17/05/08   50.   The Jesus of... 18:09  |  American Christian 17/05/08   51.   I`m buying ANOTHER Hummer! AAALLLLAAHH!!!! 18:12  |  Barooommm!!! 17/05/08   52.   The da Vinci Code 20:24  |  Shimon Cleopas 17/05/08   53.   One Word will be enough 20:32  |  Shimon Cleopas 17/05/08   54.   so what exactly are we trying to accomplish? 21:48  |  snoopyloopy 17/05/08   55.   what`s the goal? 21:49  |  snoopyloopy 17/05/08

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