In the face of pessimists, international crises and political turmoil, Saudi Arabia continues to stand behind its oil-production commitments to the U.S., according to Prince Saud Al Faisal, Saudi foreign minister. Faisal spoke in Houston at The James A. Baker Institute for Public Policy days before Hurricane Rita delivered a second blow to the Gulf of Mexico oil and gas production industry. He said efforts to question Saudi performance are pulling attention from the real energy-crisis issues. "The focus on tarnishing proven Saudi performance is largely a distraction from the fact that the key price and supply issues affecting you are not about volumes of production, but rather about gasoline formulations, limited refinery capacities, lack of storage capacity and the various other restrictions that have paralyzed the energy industry in the Western hemisphere." The Energy Information Administration reports that daily global refining capacity has only increased by 1.3 million barrels during the past five years, while daily oil demand has increased by more than 7 million barrels. Global refining capacity is now 82.7 million barrels per day-1 million short of global demand. No refineries have been built in the U.S. since the 1970s. Since 2002, oil prices have doubled. This sharp price increase is only a phase of a cumulative process that has been going on for some time, he said. "Resolving the issues before they become too severe to manage becomes a matter of urgency and priority for all of us, especially when Saudi-bashing has become fashionable and allocating blame has become an end in itself." For more on this, see the November issue of Oil and Gas Investor. For a subscription, call 713-993-9320, ext. 126.
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