Leading Democrat Schumer Begs the Saudis to Increase Production

Updates

February 27, 2012: Today Senator Schumer is pleading. Literally pleading for the Saudis to increase production. 

Original Post

Is it just me, or am I misreading this (link farther down)? Senator "Chuck" Schumer asking the Obama administration to beg -- literally, beg -- the Saudi's to produce more oil?

Why is he not asking the administration (his own party) to work with our own domestic oil and gas industry to do the same thing rather than what President Obama IS doing?

Before reading any further, see the link below to see how much Washingtonians are paying for gasoline:

In Washington, DC, two percent of one's income goes to gasoline.

So, now with that as background (the Obama administration slow-rolling the US oil industry and Washingtonians paying 2 percent of their income on gasoline) we now proceed.

Am I misreading this? Senator Schumer asking the Clinton Obama administration to beg the Saudis to produce more oil.

Didn't Schumer's state ban fracking? Just asking. Need I say more? If so, go back to the first link above. (I believe the Marcellus extends into New York state.)

Anyway, here's the Schumer press release embedded in a television news story:

Dear Secretary Clinton:

As you are aware, due to the worry turmoil in the Middle East and its impacts on oil supplies, American consumers are facing rising gasoline prices, with the national average price of a gallon of regular gas at $3.69. This is nearly double 2009’s average of $1.86 a gallon and the highest prices we have ever seen for this time of year. The price of diesel fuel has also increased reaching $4.02 a gallon. The price of diesel fuel not only affects truck drivers, but it pushes food and transportation costs higher for consumers, too. The combined effect of these energy price hikes drags down our economy, which can undercut our recovery. These skyrocketing fuel prices are directly linked to the global energy market, particularly Iran’s recent efforts to manipulate oil prices and the worry of impacts on supply from an escalation of regional hostilities. To address this situation, I urge the State Department to work with government of Saudi Arabia to increase its oil production, as they are currently producing well under their capacity.

Saudi Arabia, according to the U.S. Energy Information Administration, is averaging around 10 million barrels of oil per day. This is 2.5 million barrels short of their approximately 12.5 million barrel capacity. These lower production levels have a negative impact on global markets. When paired with recent actions by Iran in halting sales to French and U.K. companies, and threatening to stop sales to countries such as Italy, already fragile markets are unduly roiled. These market shifts are now hitting Americans at the pump, reverberating throughout the rest of our economy, and threatening our recovery.

"These market shifts are now hitting Americans at the pump, reverberating throughout the rest of our economy, and threatening our recovery." What? Two (2) percent of their income and folks in Washington are complaining. You have got to be kidding.

First of all, turmoil in the Middle East is a very small factor when it comes to the price of oil right now. Very little US oil comes from the Middle East any more and the US is now a net exporter of oil (source: Public Television business show this morning).

But for argument's sake let me give you that: if it's the turmoil in the Middle East, it's the US that is pressing the Iranian sanctions. It wasn't China, India, or Russia calling for sanctions. Iran calls our bluff and imposes its own embargo shutting off oil to France and the UK.

And so now Senator Schumer is asking Hillary to beg the Saudis to increase production? Am I missing something?

But I guess it's working: Oil futures are down 31 cents now, down to $109.46.

Which brings us to the "nut" of Schumer's request: his argument that Saudi is producing well below its capacity. Not just a tad, not just a little, not just a smidgen, but "well below" its capacity.

If that's accurate, there are only two explanations for their decreased production: either they really dislike the Nobel peace prize recipient or they are unable to increase production. Neither explanation is really very reassuring.

Senator Schumer might want to go back and listen to the former CEO of Shell, Mr Hofmeister, and his discussion of "business as usual."

Speaking of which, "business as usual," did Senator Schumer write a letter to Ms Lisa Jackson, head of the EPA, imploring her to give a "nod and a wink" to the President so he would approve the Keystone XL? Approval of the Keystone XL would not immediately effect the price of oil, but it would send a clear message to the American voter that it is no longer "business as usual"with regard to how the administration will work with the domestic oil industry going forward. That would be reassuring, and I bet the price of WTI-NYMEX would drop $10.

Wow, take the time to read the news story linked above. Read the Schumer letter begging the Saudis to produce more oil. Either they can or they cannot, and if they can, and they aren't, it speaks volumes about our relationship with one of our longest Mideast allies. (Speaking of which, how are things going in Egypt?)

Personally I don't think they can.